Michael Farid

YC has quietly built a parallel tech ecosystem. Not just a network - an entire operating system for startups. Think about it: A YC founder can build their entire stack using only YC companies. Infrastructure, analytics, payment processing, marketing tools - it's all there. At friend-and-family prices. When you launch a product to the YC network, you get something priceless: A group of technical founders who actually understand what you're building. They become your first users, your debuggers, your evangelists. This is why PostHog is now used by 65% of new YC companies. This is why Brex dominated fintech... and why each YC batch makes the next one stronger. A true compounding advantage.

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The smartest YC founders I know are NOT raising VC money. Here are FIVE unique things they're doing instead: 1) Firing their least technical co-founder. 2) Importing/exporting used Herman Miller chairs. 3) Selling their YC office hours on Craigslist. 4) Auctioning screenshots of their Stripe dashboard as art. 5) Using Central to eliminate nonsense HR/finance work and focusing on profitability - centralhq.com What else am I missing?

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Yes, I’ve read the Culper short report on AppLovin. My thoughts: No, it’s not revelatory. Pre-loads and one-click installs on Android are common practice. Digital Turbine and ironSource offer similar products. App developers pay on app open. In fact, there’s no way to confirm the install absent an open. AppLovin also offers ROAS bidding. The notion that Google Play would be unaware of any malicious activity by AppLovin, the largest in-app broker ad network, is not credible. AppLovin is more than a decade old. Just because you’ve never heard of it doesn’t mean it’s a young company. Regarding front-running Meta spend: given the scale of AppLovin’s eCommerce advertisers’ Meta spend, they can necessarily measure incrementality. They wouldn’t scale on AppLovin if they didn’t see incrementality. I also don’t see how genuine front-running would be possible in an auction for in-app inventory. Further, it’s obvious why performance across the channels would be correlated. Full disclosure: I have a small, long-dated call position on AppLovin that amounts to <5% of my PA (notional). I have no commercial relationship with the company.

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Product-market fit genuinely feels different...and it'll show up in the data Demo to close rates are the easiest thing to look at for product-market fit right now. Vertical AI startups in our portfolio are seeing 50%+ demo to close rates, even with brand new account executives selling the product. It's happening in every market from AI takeoffs to AI CSR/Voice software to AI procurement solutions. When you see a demo to close rate over 50% chances are you have a jaw dropping customer experience and you should put your foot on the gas. If you're seeing something dramatically lower in mid-market or SMB ACV categories, it's worth revisiting your product and/or your pitch.

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Curiosity is an underrated trait in engineers. In my experience, the best engineers are curious about problems and new tech. They lean in, read up, and ask questions. They don't prematurely conclude something isn't worth their time. Mediocre engineers aren't curious and default to a defensive posture: "this is dumb", "why should I care", "it's just hype", etc. Be a curious engineer.

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Ok, time for a rant. 90% of "AI Startups" aren't even AI. I've seen founders that use LLMs or have a chatbot somewhere on their site and call it an "AI startup". I've seen people who vibe code or use Cursor/Lovable and then say they have an "AI startup". I've seen people continue to build ChatGPT/Claude/Llama wrappers and call it an "AI startup". If you haven't build a custom model or used meaningful proprietary data then you aren't an AI startup, you're AI Enabled. AND THAT'S FINE. You don't have to be an AI company to solve a problem. So many companies and VCs are going to have poor performance because they have little differentiation and have claimed to build/invest in "AI Companies" and we will soon learn they are not really "AI".

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I met a YC founder who raised $3.5M, but kept the team to 3 people. He took 2 years to launch— then grew 10x to $2M ARR in a year: Benji built an end-to-end recruiting platform with just 3 people. Today, he raised a $50M Series D. Since 2022, he grew Ashby from 70 to 220 employees—and 2,700 customers. He hit $200K ARR the year he launched— then 10x’d to $2M ARR the year after. I asked Benji why it his end-to-end solution worked when so many “one stop shops for X” fail: 1. There were big unsolved pain points. 2. Existing vendors were small companies.  3. It was possible to build a bundle of best-in-class products. “If you can give people 1 product that works better than 4 products without losing functionality…people will be happy to use that.” It sounds too easy— and it is. Benji was a Director of Engineering, where he spent 90% of his time hiring— he experienced the problem first-hand. He thought about his idea for 18 months before going all-in. He had 100 conversations with potential customers before he started building. He graduated YC, raised $3.5M, but didn’t hire anyone. He kept his runway long. It wasn’t just turning 4 products into 1. Benji understood the pain point, the customers, and the space. He succeeded for the same reason most startups do: He put in the the work— the unsexy, everyday work. The work behind the scenes. The work that doesn’t make headlines. The work you never see. /// Listen to the full episode with Benjamin Encz on The Product Market Fit Show #startups #venturecapital #founders

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Zynga sold for $12.7 billion. Its founder says startups fail due to this: They try to innovate too early (unless its deep tech). Mark Pincus calls it the “All new fails” rule: 1/ Don’t start with “new”: Start with what’s already proven to work. Copy it legally, study it deeply. 2/ Proven means 10 out of 10 users say: “Yeah, that works.” If they don’t, it’s not proven. 3/ Founders fail because they skip the proven phase: They chase novelty before they’ve earned the right to innovate. 4/ The Zynga story began with poker: Same table, same felt, same gameplay, nothing original. 5/ Then they made it better: No downloads. Just click and play. Friction cut in half. 6/ “Better” means 10 out of 10 users agree: Not your team, not your investors, real users. 7/ Only after proven and better do you earn “new”: That spark that surprises and delights users emotionally. 8/ Zynga’s “new” was showing your friends’ faces: It made games social, not solitary. 9/ Forget MVP, build a minimum viable idea: A concept that hits emotional resonance before metrics. 10/ Seek true signal: You’ll feel it viscerally before you can measure it. 11/ Silicon Valley worships originality: But originality without resonance is noise. 12/ Better founders are great students first: They copy what works before they try to change it. 13/ Most products die from founder ego: They’re “new” before they’re useful. 14/ Users don’t care about novelty: They care about ease, trust, and delight. 15/ “Proven → Better → New just works. And it built a $12.7B company. 📩 Get ai + vc intel in your inbox via my newsletter Startup Riders, link under my name ☝️ 📌 Source: Mark Pincus on Why Most Startups Fail a16z #ai #llms #agent #startups #founder #vc

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After six years of building consumer startups, I’m now creating AI enterprise software at YC. It’s a big pivot - so what changed? 1. Consumers have high expectations, whereas enterprises don't. - With consumer products, you're up against the Apples and the Metas of the world. The standards are sky-high.  - With enterprises, you're competing with the Jiras (sorry Jira) - outdated, old tools that almost every user complains about. A previous investor of mine told me “b2b is 20% product and 80% sales”. So when a truly polished product appears (Slack, Linear), enterprise buyers are pleasantly shocked - and word of mouth drives sales. 2. Consumer iteration takes weeks, whereas enterprise software iteration now takes hours. - I might be biased: I built a lot of consumer hardware (i.e. self-serve PCs running the latest open source AI models - before it was cool). Whether hardware or software, consumer products take time because people expect perfection. - In enterprise, we're solving a clear problem. Our customers tell us which features they need most. Combine that with building on AI tools (Cursor, ChatGPT), and we ship features in hours, not weeks. 3. I'm no longer building just for myself; I'm building for others but with clear goals and problems to solve. - In consumer, you never really know if people will want your product. You build for yourself and slowly as your product gets better, others hop on board. - In enterprise, the issues are spelled out, with exact milestones and features laid out by our customers. There’s no guessing. What does this all mean for Oki? We're using state of the art tech (AI to automate project tracking), competing against outdated last gen project trackers, and solving clear problems (that engineering leaders simply cannot know what's going on as a company scales). And we’re building Oki with the same polish as a consumer product. We are poised to win. 🚀

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One of the Y Combinator partners asked me to talk to a potential founder who was considering whether to apply. Below is some of what I told them, in case it's helpful for anyone considering applying: - you will build faster with YC pushing you than you will without it. Now is a good moment in history to move quickly - the application, itself, will force you to think through a lot of extremely important things you probably haven't. This goes even for pre-traction ideas - the group partners are some of the most incisive, tough, yet positive technologists and people you could ever have in your corner. And they're there for you for life: we still meet with ours regularly - beyond the speed it offers, YC, its network effects, and its megaphone for startups made a huge difference for us, even though we launched fairly late in our batch (hardware is hard). One way this was apparent: within a day of launching, Weave Robotics had an entire week of investor meetings lined up. And we went on to raise above our target. In this way YC really does give you an unfair advantage -- And if you think you're too early, 40% on average of the co's YC funds each batch are just an idea And if you're not done with your application and are worried because the deadline is today, they accept applications after the deadline. That said, now is a good moment in history to move quickly 😉

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Unpopular opinion: The best engineers don't work at FAANG companies. The best founders aren't Stanford graduates. The best startups are not always backed by top accelerators. The best talent comes from having the grit to solve real problems. What truly matters is the impact you create, not the logo on your email signature. I see this now with Cravd. Our team ships features every week, solves complex operational challenges, and builds community trust...all without the safety net of big tech infrastructure. We're solving a real problem that affects millions of households struggling with daily cooking. The real unicorns are the ones who can look at a messy, unorganized market and see opportunity. Who can build something from scratch because they deeply understand the problem, not because they followed a playbook. Sure, having Stanford on your resume opens doors. But what keeps those doors open? Your ability to execute. To persevere when things get tough. And most importantly, to never settle until you find your true purpose 💪. Real innovation happens when you're willing to get your hands dirty solving messy problems, not when you're chasing prestigious titles. Agree? ♻️♻️Repost if you agree with this post or found it helpful #startups #yc #founder

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