[The Big Interview] Y Combinator partners: "Founders will never learn the truth about business from people close to them"

When you meet two partners from Y Combinator, you know that the mysteries of entrepreneurship are going to be unravelled. Tim Brady and Adora Cheung, two PhD drop outs who ran successful startups and worked in the corporate world, talked about investing in India and why it is the best thing to do. In the country to talk about their startups Kisan Network, Clear Tax, and Razorpay, they were quick to point out that working in a startup requires a strong work ethic, with 80–85-hour weeks being par for the course. They also had some words of advice for startups: making money with a focused customer acquisition and service matters more than media interviews and funding news. Here are the excerpts of the interview:

1. Tim, do you want to talk about your early days in Yahoo back in 1995 and the team that you worked with? Do the learnings from those hard hours of work hold today too?

Tim: The founding team at the time worked out of the office and lived there. Back then, people believed that the internet was not big. I remember David Filo, the founder of Yahoo, practically lived in the Yahoo office and when he came home on the weekends he would sleep on his futon, which was his only possession. For a startup, it is about the founders and the vision they have about the company. They are the ones who set the culture of that company in motion. At Y Combinator, we tell our startups that all they have to do is focus on coding, the product, and the customer. They have to eat, sleep, and exercise apart from work. That is how all startups succeed.

2. In a startup, people have to realise that they have to work in a short span of time?

Tim: Let me brutally honest with you. Startups have to work in finite time and they do not have time on their side. I must warn founders that they have to make their company work. I warn our startups at Y Combinator to focus on the company and the culture must be the work ethic to make the product successful.

Adora: That’s how people see value in you and the company. Metrics like customer acquisition and business model are things that founders have to be focused on. Once you get customers you have to retain them and then you need to work with a team that knows the business very well. Founders will have to realise that people who know them very well will never tell them the truth about the business. A startup should make money and focus on the real value. It is not about their presence in press conferences and at big events. Very often, the tendency is for the individual to become larger than the company. These things do not count at all.

3. Companies are obsessed with fund raising; is that a good way forward?

Adora: Raising money is good, but without your deliverables, like having a good sales pipeline and having great employees and building great product, fund raising is not the endgame.

Tim: I advise that fund raising in small amounts is a good way to go about creating value. The money can be used to build the product and then when it gains acceptance there can be larger rounds of fund raising. In the end, the ethos is to build momentum and take it up a notch or two.

4. This year has been hard on companies — funds are not easily available. What do you think about India as an investment destination?

Adora: At Y Combinator, we are not afraid to fund Indian startups. People get rejected all the time and that does not mean the ecosystem is bad. Entrepreneurs need to show that as founders they can get things done. That’s when investors take you seriously. If an entrepreneur is making sure his customer retention is good and is generating money, then investors will take him seriously. Remember that focus is key and we believe that India has a lot of ideas and it is only going to grow.

Tim: Being an entrepreneur is a full-time job and at Y Combinator we tell them that that’s everything that makes a successful entrepreneur. Ignore the talk around you and write code. Get something done. We think there is enough value to be created in India and we have already worked with a few startups that have created value in the Indian B2B and B2C ecosystem. In the end, Y Combinator is building a network which has created rich experiences and interactions worldwide.

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