Thu · Jun 9

Jessica Livingston's Pretty Complete List on How Not to Fail

Jessica Livingston, co-founder of Y Combinator, spoke at our Female Founders Conference.

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Here's Jessica's keynote from our third annual Female Founders Conference, which brought together more than 800 women building women-led startups.

Jessica has seen over 1000 companies go through YC and shares her learnings about what it takes to succeed as a founder. She emphasizes the importance of avoiding distraction and making something people want:

Nothing else you do will matter if you're not making something people want. You can be the best spokesperson, the best fundraiser, the best programmer, but if you aren't building a product that satisfies a real need, you'll never succeed. [...]

While I'll tell you that it is going to be harder for you as a woman, it's not going to be so much harder that it will make the difference between success and failure. If you want to start a startup, go ahead and do it and don't let yourself be intimidated or distracted by all the noise.

You can watch her entire talk and read it below.

I want to start off today with some personal news. After working on Y Combinator for 11 years, I’m going on sabbatical for the next year. I want to focus on some projects and, to be honest, I'm a little tired. YC is one of my favorite things in the world, but it's also all-consuming, and it's hard to work on something all-consuming for 11 years without a break. I also want to spend more time with my sons. They're 7 and 4 now, and I won't be able to get these years back. So pretty much right after this conference, I'll be starting my sabbatical.

And that brings us to the topic of my talk. I'm going to tell you what I want you to remember while I'm away. I was thinking about what I wanted YC's founders to remember while I was away, and I realized that everything I wanted to tell them was just as applicable to all of you. So I’m giving you the exact same advice that I’d give to YC founders.

1. Make something people want.

This is YC's motto, and after 11 years and more than 1000 startups, I know we picked the right one. Nothing else you do will matter if you are not making something people want. You can be the best spokesperson, the best fundraiser, the best programmer, but if you aren’t building a product that satisfies a real need, you’ll never succeed.

My advice to those of you who are still looking for an idea is to solve a problem that you yourself have. Then you'll know it's something at least one person really wants. And when you're part of the target market, you'll have insights about it that you wouldn't otherwise.

But you should graduate from making something just for yourself to making something for other people as fast as you can. And to know what they want, you have to understand them. Do they like what you've made so far? If not, why not? Talk to your users as much as you can, even if that means doing things that don’t scale early on. I don't know of a single case of a startup that felt they spent too much time talking to users.

And be open to adjusting your idea, because most good ideas evolve.

The most famous example of that sort of evolution in the YC community is probably Airbnb. They started with airbeds on floors for conferences, then airbeds on floors but without conferences, then actual bedrooms, then whole places. That final step happened, believe it or not, because Barry Manilow went on tour. His drummer was an early Airbnb host, back in the days when the host was expected to be there. One day he told the Airbnbs that Barry was going on tour and could he rent out his place while he was away? The Airbnbs really had to think about it. They were still AirBedandBreakfast back then, not Airbnb, so guests had to get breakfast! But in the end they said yes, and this type of stay is now most of Airbnb's business.

Your users are your guidepost. And the way you stay on the right path in the early stages of a startup is to build stuff and talk to users. And nothing else.

2. Stay focused.

One of the most conspicuous patterns we've seen among the thousand startups we've funded is that the most successful founders are always totally focused on their product and their users. To the point of being fanatical. The best founders don’t have time to get caught up in other things.

Here’s a list of things that I see easily distract founders. These are like the startup equivalent of wolves in sheeps’ clothing.

  • "Grabbing coffee" with investors

  • Talking with potential acquirers

  • Networking

  • Recruiting boards of advisors

  • Doing a "partnership," thinking it will get you more users

  • Spending time on PR before you have made something people want

  • Arguing on social media

  • Going to conferences

  • Worrying about being a woman in tech

Notice this list implies you shouldn't be here. Here I am on stage at a conference, telling you that you shouldn't go to conferences. And honestly, as a rule you shouldn't. That's why we try so hard to make this conference good-- because we know that it has to be more useful to you than spending the same time building things and talking to users, and that’s a very high bar.

3. Don't worry about being a woman.

I want to talk a little more about that last point, worrying about being a woman in tech, since it's the only one on the list that's specific to this audience.

There are some real obstacles women face as startup founders. But there is just so much talk and noise about this topic that I worry it will scare potential founders away. Also, it’s hard to sift through everything and know what’s accurate and what’s not. The conversation around this topic is too often driven by people who are not actually building anything themselves. And as with any other topic, the amount of attention the press devotes to this issue is not determined by the size of the problem, but by its potential to generate page views. Controversy generates page views, so they write about controversy. You don’t hear as much about the many female founders who are quietly and successfully building their companies.

I don’t give a shit about page views. What I care about is how I can help support female founders.

The way I do it is to encourage women to start startups and help them succeed once they do. So while I’ll tell you that it is going to be harder for you as a woman, it's not going to be so much harder that it will make the difference between success and failure. If you want to start a startup, just go ahead and do it, and don't let yourself be intimidated or distracted by all the noise…all the news articles and Twitter controversy about how it's harder for you as a woman. That’s not only the best plan for you personally, but it’s also the best way to fix these problems.

4. Measure your growth.

If you do the first two things I told you, make something people want and focus, you'll get growth as a result. And that means you can use growth as a test of whether you're doing those two things. If you have a good growth rate, which in a startup means at least 10% per month, you're on the right track. And if you don't, you're missing at least one of the two ingredients I mentioned. You're either making the wrong thing, or not focusing enough.

There's a famous sentence we often quote at Y Combinator: You make what you measure. Pick a number you want to grow, and focus on that. The best metric to choose is good old fashioned revenue. There's no better test of whether you're really making something people want.

Focusing on growth also prevents you from being in denial, which is a big danger for startup founders. For some reason, a lot of the problems you face in a startup tend to provoke denial. Maybe it's simply because these problems are hard.

Founders who are making the wrong thing are often in denial about it. Founders who are wasting their time on inessential stuff are often in denial about it. Denial is the silent killer of startups. But if you hold yourself to growth targets, you can't remain in denial. The numbers, good or bad, are staring you in the face.

Unless of course you're in denial about the need to hold yourself to growth targets. And that, believe it or not, happens all the time. We constantly hear founders saying, "We're not focusing on growth right now." There are times when that is the right thing to do, but I don't even need to tell you how things usually turn out after we hear that from founders.

5. Know if you're default alive.

Growth isn’t enough, though. You can have a good growth rate and still die, if you run out of money and can't raise more.

The critical question is whether you’re what we call "default alive" or "default dead." Default alive means if your expenses stay the same and your revenue continues to grow at the rate it's been growing, you get to breakeven before you run out of money. Default dead means you don’t.

We now ask all YC founders to begin their investor updates to us by saying which of the two they are. As well as telling us how the startup is doing, it's a good way to yank the founders out of denial. Because being about to run out of money is another of those dangerous problems founders are often in denial about. You'd be amazed how many founders don't even know whether they're default alive or default dead.

6. Keep expenses low.

Why do startups run out of money? By spending too much. And since the main expense in most startups is salaries, spending too much = hiring too many people. Overhiring is the big mistake in the second phase of a startup, as making something no one wants is in the first phase.

I know how dangerous overhiring is, because YC startups constantly make this mistake despite us constantly warning them against it.

The problem with overhiring is that it gives you less margin for error. The faster you're burning through the money you have in the bank, the less time you have to make it profitability. But startups, because they're usually both run by inexperienced founders and doing something novel, are exactly the type of thing that takes longer to get right than you expect. And that’s a deadly combination, because if you start to run out of money before you have things working right, you have to raise more during a phase when the company is an "ugly duckling." Even if you're on the right track, you look bad right now. And investors don't like companies like that.

So after you raise money, be very conservative about how you spend it. Hire for the pessimistic case. Assume it will take longer than you expect to get things working. If there's one thing you can forsee in a startup, it's unforseen problems.

I constantly see startups that die even though they're on the right track, simply because they hired too fast.

7. Fundraising gets harder.

The reason startups get so slammed when they have to raise money as an ugly duckling is that later rounds of fundraising get much harder. Founders who had a fairly easy time raising a seed round think it will be just as easy to raise a series A. It’s not.

We often get emails from startups saying "we're running out of money, so we're going to raise a series A now." As if it were like making a second trip to the ATM. And when we ask how they're doing, the answer is usually a combination of slow growth and high expenses. We have to tell them they have no hope of raising a series A and that they'll have to make drastic changes even to survive.

Series A investors have a totally different attitude from seed investors. Seed investors are looking for promise. Series A investors are looking for performance. They know that all the returns from venture investing are concentrated in the big winners. So they want to invest in you only if you are clearly on a path to being a big winner. They'll pay high prices if you are. But if you aren't, they won't invest at all. So even if you're on the right path, but still in the middle of converting promise to performance, they still won't invest. To them there’s not much difference between a startup halfway along the right path, and a startup on the wrong path. If they don't see sufficient progress, they don't care why.


I've made startups sound pretty scary so far. I’m sorry, I can’t help myself sometimes, I’ve just seen so much. The good news is, this is a pretty complete list. If you avoid all the mistakes I warn about here, you'll be in really good shape. If you start by making something people actually want, focus on making users happy, make sure you have a good growth rate and don't overhire, you’ll be in a very happy position. You will be master of your own fate in a way that very few people ever get to be.

We host this conference for two reasons: 1) to inspire more women to start startups and 2) to try to help women who already have started startups become more successful.

But I have a more specific goal than that. I want there not just to be more female founders. I want there to be more female founders of the big winners. The companies that some people call unicorns. These are the founders who make the most effective role models, and role models are what we need most if we want to encourage more women to take the leap and start their own companies.

And you know where the founders of these big winners are going to come from? From this room!

After funding over 1000 startups at Y Combinator, I know what it takes to start these super successful startups. And from meeting the people who came to past Female Founder Conferences, I know there are a lot of you in this room who have what it takes. Imagine the future we'll have if you go ahead and do it.

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