‘It is difficult to successfully mimic Y Combinator’s model without mimicking our surroundings’
Tim Brady is best known as the first employee at Yahoo and for writing the internet company’s first business plan that helped it raise funding. He stayed with Yahoo until 2003 as its chief product officer (see this great interview of his time there). He then worked on a series of education businesses, the last of which is Imagine K12, an edtech accelerator, that got merged with Y Combinator, perhaps the most successful seed accelerator of its kind with names such as Airbnb, Dropbox and Reddit among those it has backed.
Brady, who is a partner at Y Combinator, based in Silicon Valley, is visiting India later in September along with co-partner Adora Cheung to meet Indian entrepreneurs in New Delhi and Bangalore. In an interview spread over two emails, Brady talks about the Y Combinator Way, how it views India, tips on hiring, and his days at Yahoo. Edited excerpts:
Q: From where you are, what do you make of Indian startup and technology ecosystem? Can you share YC’s expectations from India from your proposed trip?
A: We are coming to learn more about the Indian startup ecosystem. We don’t have any set expectations. We have experienced an increase in the number of quality applications from India to YC in the past few years. We have worked with a handful of India-based startups and they have been fantastic. We know there is a strong higher education system that graduates 1.5 million engineers every year. Engineers are the foundation of most startups.
We want to learn more about the Indian startup ecosystem. We want to share our beliefs about how entrepreneurship can be a powerful force for good. We want to recruit more great companies to our program.
Q: Apart from reaching out to emerging startup ecosystems such as India, would YC do anything else in these markets?
A: We currently don’t have any plans to expand outside of Silicon Valley, but we are always evaluating our options about how best to scale what we do.
Q: Many aspiring entrepreneurs are faced with the question of whether to join an accelerator/incubator, or bootstrap or go out and chase seed investors. What’s your thoughts on these routes? And what do you think of bootstrapping?
A: I am obviously biased because I am at Y Combinator. I think YC can be a great help to getting a company off the ground and even beyond. Seed investors are a key part of our ecosystem. They can be incredibly helpful if you find the right ones.
If you are able, bootstrapping is a great default plan. At YC, we call it “default alive.” That means you can survive without having to raise money. It also means that you are better able to choose your investors and choose your course of action. You don’t need to act out of a desperate need to survive.
Q: How do you measure success of startups that go to Y Combinator? Is it follow on funding?
A: Quantitatively, we measure our success by the market value of the companies that come through our program. Qualitatively, we measure our success by the positive effect that these companies are having on the world. Airbnb is a great example of a company that is both: a company that is high valued financially and clearly having a positive impact on the world.
We do pay attention to short term metrics, such as follow on funding. Follow on funding is usually a key step for companies to achieve their potential. But our ultimate goal is to help build important, lasting companies that are both highly valued from a financial standpoint and highly impactful on the world.
Q: Of the startups that go to YC, how many or what percentage fail?
A: Most startups fail. That is the reality not just at YC, but everywhere. Startups are hard. Our goal at YC is to give companies a great start to help increase their chances at success.
Q: Over past few years, a generation of incubators and accelerators emerged in India, trying to mimic the YC Model. Most of them struggled, shut down and only few survived. What works and what doesn’t, in your experience?
A: Silicon Valley’s main industry is startups. The infrastructure and culture are highly tuned for making it easy to start a startup. YC’s model leverages many of the things that are unique to Silicon Valley. It is difficult to successfully mimic YC’s model without mimicking our surrounding environment.
My advice would be to carve your own path leveraging the thing unique to your environment.
Q: You’re Yahoo’s first employee. Looking back, and now where Yahoo is, what are the key takeaways from Yahoo’s journey so far?
A: The key takeaway for me is focus. In the mid-90s, Yahoo’s market position was such that it had the opportunity to pursue many lines of business. Rather than choosing a few and and doing them well, we tried to do everything. We were successful with that strategy early on, but as time worn on, it became clear that we were doing many things but few of them well. We had opened up too many competitive frontiers. Over time, we had difficulty competing. Whatever you choose to do, you have to do it well.
Q: Many startup founders struggle to pick the right first hire, and when they do, a lot depends on making it work. Sometimes it doesn’t work at all. What will be your advice to founders looking to build the founding team, hire first employee(s)?
A: My advice is to put the necessary time into hiring. Finding, interviewing and onboarding great people is a difficult and time consuming process. But making a bad hire is way more time consuming when you add it all up. If you do make a mistake in hiring, don’t ignore it. You need to let people go who don’t measure up. They will kill your startup if you don’t.