Billionaires Build

December 2020

As I was deciding what to write about next, I was surprised to find
that two separate essays I'd been planning to write were actually
the same.

The first is about how to ace your Y Combinator interview. There
has been so much nonsense written about this topic that I've been
meaning for years to write something telling founders the truth.

The second is about something politicians sometimes say — that the
only way to become a billionaire is by exploiting people — and why
this is mistaken.

Keep reading, and you'll learn both simultaneously.

I know the politicians are mistaken because it was my job to predict
which people will become billionaires. I think I can truthfully say
that I know as much about how to do this as anyone. If the key to
becoming a billionaire — the defining feature of billionaires —
was to exploit people, then I, as a professional billionaire scout,
would surely realize this and look for people who would be good at
it, just as an NFL scout looks for speed in wide receivers.

But aptitude for exploiting people is not what Y Combinator looks
for at all. In fact, it's the opposite of what they look for. I'll
tell you what they do look for, by explaining how to convince
Y Combinator to fund you, and you can see for yourself.

What YC looks for, above all, is founders who understand some group
of users and can make what they want. This is so important that
it's YC's motto: "Make something people want."

A big company can to some extent force unsuitable products on
unwilling customers, but a startup doesn't have the power to do
that. A startup must sing for its supper, by making things that
genuinely delight its customers. Otherwise it will never get off
the ground.

Here's where things get difficult, both for you as a founder and
for the YC partners trying to decide whether to fund you. In a
market economy, it's hard to make something people want that they
don't already have. That's the great thing about market economies.
If other people both knew about this need and were able to satisfy
it, they already would be, and there would be no room for your
startup.

Which means the conversation during your YC interview will have to
be about something new: either a new need, or a new way to satisfy
one. And not just new, but uncertain. If it were certain that the
need existed and that you could satisfy it, that certainty would
be reflected in large and rapidly growing revenues, and you wouldn't
be seeking seed funding.

So the YC partners have to guess both whether you've discovered a
real need, and whether you'll be able to satisfy it. That's what they
are, at least in this part of their job: professional guessers.
They have 1001 heuristics for doing this, and I'm not going to tell
you all of them, but I'm happy to tell you the most important ones,
because these can't be faked; the only way to "hack" them would be
to do what you should be doing anyway as a founder.

The first thing the partners will try to figure out, usually, is
whether what you're making will ever be something a lot of people
want. It doesn't have to be something a lot of people want now.
The product and the market will both evolve, and will influence
each other's evolution. But in the end there has to be something
with a huge market. That's what the partners will be trying to
figure out: is there a path to a huge market?
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