#88 - Office Hours with Michael Seibel

**Craig Cannon** (0:00)
Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinator's podcast. Today's episode is with Michael Seibel. Michael's a partner and the CEO of YC. He co-founded Justin TV, which was in the winter 2007 batch, and Socialcam, which was in the winter 2012 batch.
For this episode, we took questions from the internet. If you have questions for a future Office Hours episode, just tweet them our way.
All right, here we go. Let's start with the first question is about doing YC, the program, the core program that people know. A common question is, why is YC worth the 7%? What do you think?

**Michael Seibel** (0:37)
So when I think about YC, and I talk to founders about it, oftentimes I tell founders, it's in their best interest to start building up unfair advantages in their startup.
It used to be that an unfair advantage was capital, but more and more now you see capital being very widely available. And so I tell founders to start thinking about what other unfair advantages can they get? So with YC, I think a lot of founders always want to know about fundraising. What's the unfair advantage you get around fundraising?
First, YC companies get higher valuations. Typically 50% to 2X higher than companies who don't do YC.
We see valuations on demo day ranging anywhere from $4 million on the low end to $25 million plus on the high end, with most valuations between $6 and $12 million.
Put another way, when you raise money through YC, you get less dilution. Second, better investors. We have taken the time and energy over a decade to collect all of the best angels and VCs and put them in one room.
The YC batch is one of the most heavily scouted group of startups in the world. And so we do the work for you to put the best people in the room. And then the final one is that fundraising happens faster. When you go through YC, some companies can completely finish their fundraise in under two weeks. And almost everyone is finished within two months. As opposed to other processes that you might run alone, which can drag out longer. So first, we give you a bunch of unfair fundraising advantages. I say the next thing, and I would argue even more importantly, is we give you an unfair advantage around a batch. You're batched with other companies that are in the similar state as you are. And even if you're an experienced founder, and I've done YC twice, the second time I was very experienced founder, I don't have at any given time a whole bunch of friends and colleagues who are all starting companies right now. And so being able to literally be around a whole bunch of other people who are just getting started and who are grinding within the first year or two and still grinding is extremely valuable from a friendly competition perspective. But it's also extremely valuable just from a support perspective. You have to talk to people who are there with you. And to have this whole variety of people so you can find the people that you're going to actually relate to the most.
The next one is software.
What kind of software does a typical investor give you access to? None.
With YC, we give you access to a whole variety of software that gives you unfair advantages. There's a forum that allows you to ask questions and hear questions from other founders came for you. There's work at a startup, which allows you to basically recruit off of YC's brand. There's posting job posts on Hacker News, which only YC companies can do. There's an investor database with over 5,000 entries, including reviews and data from every company that's ever done YC. There's deals, which are literally millions of dollars worth of discounts given by top companies.
There's a company, a YC company directory, which allows you, if you're a B2B company, to actually sell into other YC companies. It's one of the secret advantages of being in YC. There's an alumni directory, which also allows you to sell into companies and also allows you to find specific people to give advice. And finally, there's a knowledge base that gives you actual clear tactical written advice on PR, fundraising, growth, et cetera. And so, most of the time when you're raising from angels, typically, you get some phone calls. You get some email exchanges. With YC, I would argue that you get a platform and that's an unfair advantage. The last thing is additional programming. A lot of people think of YC as a three-month program, one and done. In fact, YC is built to support you from the beginning of your company to the end of the company. And two of the newest programs that we've built are specifically relevant to a lot of founders. One is a Series A program where we actually rebatch you with companies that are now in the anywhere between $150,000 to $300,000, $400,000 a month in revenue who are going out and raising Series A. We teach you how to raise a Series A. We teach you how to deal with the professional process. We teach you how to do a great deck, and then we send you out at the same time and connect you with investors. Having an advantage in terms of raising a Series A, I would argue, is one of the biggest competitive advantages you can have. Last, we have what's called the YC Growth Program, and that's run by YC Continuity, which is our growth stage fund. And if you're running a company from anywhere between 50 to 150 employees, suddenly as a CEO, your job changes. It's not about product market fit anymore. It's about how do you manage an organization, how do you build an organization. And our Growth Program, essentially, is a series of dinners that teaches you all the tactics around how to actually be a CEO of this managing organization. As a YC founder, all of this is encompassed in the 7%. There's no additional equity that you have to give to get into any of these programs, get into any of the software. And when you're a YC founder, you're a YC founder for life. So I'd argue when you're thinking about fundraising in this environment where there's a lot of money, stop thinking about the money as an unfair advantage and start thinking about what other unfair advantages the people who are giving you money can give to your company. I think YC looks great on that perspective and it's pretty simple math why it's worth it.