#142 - Startup School Week 1 Recap: Kevin Hale and Eric Migicovsky

**Craig Cannon** (0:00)
Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinator's podcast. This week, we're going to try something different. I'm going to recap the first week of Startup School. I've cut down the first week of lectures to be even shorter and combine them into one podcast. First we'll have a lecture from Kevin Hale. Kevin is a YC partner and a co-founder of Wufoo.
His lecture is about how to evaluate startup ideas. Then we'll have a lecture from Eric Migicovsky. Eric is a YC partner and the founder of Pebble. His lecture is about how to talk to users.
We put out a lot of content at YC, and the Startup School lectures are some of the most valuable things we create. So check these out and let us know what you think.

**Kevin Hale** (0:41)
Okay, so this is how to evaluate startup ideas. And this is actually a new set of content that we've developed based on a lot of feedback that we saw from the last Startup School. And what we noticed is a lot of people's challenges. So last year's curriculum actually had a lot of content that ended up being when we looked at the data for who's participating in Startup School, was like, oh, this is much more advanced. It's much further along. A lot of people, for instance, like I had no idea, or like I have too many ideas that they don't know which one to pursue. It was a main reason why a lot of people are only able to work on their startup sometimes part-time. Yes, they might be stuck without resources, but they didn't have conviction. They didn't know, like, oh, what would I have to believe in order to say, like, I want to quit my job?
This is also a really great sort of skill to sort of have, because if you are realizing you need to pivot, how do you evaluate if you need to do that? And then also, if you're pivoting to something else, like how do you evaluate whether something is worth going to? And if you already have a launch company, then you might have problems with like, why isn't this growing? Or how do I improve it? And evaluating your startup, especially in the way that sort of investors evaluate startups' ideas, we find it's gonna be really, really useful.
So, how can I predict if an investor will like my idea? That's ultimately what I'm trying to figure out. And the answer is really easy. And so for us at YC, the definition of a startup is a company that is designed or created to try to grow very quickly. So, if you're not trying to build a company that grows very, very fast, then you're just building a normal company. It's a small business. And there's nothing wrong with that, but these companies are the ones that investors are interested in. So if you're hoping to build something that will have tons of users, that will have huge valuations, that will be able to attract venture funding, then the evidence that we want is evidence that shows that your company can grow quickly.
A startup idea is basically a hypothesis, and this is the way you should think about it. It's a hypothesis about why a company could grow quickly. And your job is to figure out how to construct your hypothesis, basically the pitch to the investor, so they understand how it can grow quickly. A lot of times, people make the mistakes of trying to just accurately describe or over-describe a lot of different parts. I'm going to break this down. Just like a normal hypothesis has a pretty decent structure for this, this will hopefully help you sort of workshop, like understanding, oh, this is exactly all the reasons why this should succeed. And so even before we start even building anything, we can have an understanding of, oh, here's the potential path of this company, or here's the things I need to prove to show that this company could do well. So the first is the problem. So Startup ID is composed of three parts. The first part is a problem, and it's basically the initial conditions. You have to explain to me, like, what is the setting for this company that allows it to be able to grow quickly? The second is the solution. So this is basically, what is the experiment that you're basically running within those conditions for it to grow really quickly? And the third is, what's your insight? So what's your explanation why the thing that you're going to try, your experiment is going to end up being successful?
Those are the three components that I'm always trying to figure out when I'm listening to someone's pitch. Here's a tip for talking about the problem, or to know whether your problem, your initial conditions, are correct.