This video is part 2 of a talk on evaluating startup ideas from an investor's perspective. The speaker emphasizes the importance of clearly expressing the problem, solution, and insight of a startup idea. They discuss the need for a clear and legible idea that can be easily understood by a wide audience. The speaker also mentions the importance of being able to effectively communicate the startup idea to various stakeholders. They highlight the need to avoid ambiguity, complexity, mystery, jargon, and ignorable language when describing the idea.

- In UX design, people have a tendency to ignore things they deem unimportant or uninteresting.
- This includes ad blindness and using language that is easily ignorable, such as marketing speak, MBA speak, and buzzwords.
- To create a great pitch, it should be conversational, avoid jargon, have no preamble, and be reproducible.
- Reproducibility is important for investors to visualize your idea and ask relevant questions.
- A good pitch should include clear nouns about what you're making, the problem you're solving, and who your customer is.
- Examples of concise and descriptive company descriptions include Airbnb and Dropbox.
- Using "X for Y" can be effective, but X should be a well-known and successful company, Y should want X, and the market for Y should be large.
- Avoid using smaller companies as X in "X for Y" comparisons.
- Lead with what your company does, not why or how.
- Make your pitch clear and efficient to capture the attention of investors.

- Being concise in your communication is important for efficiency and getting others excited about your idea.
- Conciseness shows that you have thought deeply about your idea and are efficient in your thoughts and actions.
- It is important to use clear nouns and focus on the most important aspects of your business in your description.
- Avoid using buzzwords and emphasize the problem you are solving rather than the technology you are using.
- Use modifiers and adjectives carefully, focusing on those that make your company unique and interesting.
- A concise description can create curiosity and a foundation for further exploration.

- The video is about evaluating startup ideas from an investor's perspective.
- The speaker emphasizes the importance of clearly expressing the problem, solution, and insight of a startup idea.
- It is important to avoid ambiguity, complexity, mystery, jargon, and ignorable language when describing the idea.
- The pitch should be conversational, avoid jargon, have no preamble, and be reproducible.
- Examples of concise and descriptive company descriptions include Airbnb and Dropbox.
- Using "X for Y" can be effective, but X should be a well-known and successful company, Y should want X, and the market for Y should be large.
- Lead with what your company does, not why or how.
- Being concise in communication is important for efficiency and getting others excited about the idea.
- Conciseness shows thoughtfulness and efficiency in thoughts and actions.
- Use clear nouns and focus on the most important aspects of the business in the description.
- Avoid buzzwords and emphasize the problem being solved rather than the technology being used.
- Use modifiers and adjectives carefully to highlight uniqueness and interest.
- A concise description can create curiosity and a foundation for further exploration.

In this lecture, YC Partner Kevin Hale goes over how to package up your idea and communicate it to an investor. He shares his tips on how to craft your pitch in a clear and concise way that effectively grabs your audience's attention.

Transcript and lecture slides here: https://www.ycombinator.com/library/6q-how-to-pitch-your-startup

This lecture is part of YC's Startup School, a free online program and global community of founders. Register and join the community at https://www.startupschool.org/

Timestamps
00:00 Introduction
2:09 YC application
5:08 Be clear
12:30 Example pitches
16:35 "X for Y"
20:09 Be concise
27:09 Conclusion

This is gonna be part 2 of a talk I gave at the very beginning of Startup School on evaluating startup ideas.

And the thing to know about both of these talks is we've been talking about them from the point of view of the investor.

Basically, it was helpful, I thought, to explain to founders how investors evaluate startup ideas and looking at that structure so that they can better understand their own ideas, opportunities, and then in this presentation, present them better to the people that they want to get excited.

So a quick recap, in the first part, I basically say a startup idea is a hypothesis for why your company is going to grow really quickly.

That hypothesis must compose of 3 different parts.

The problem, the solution, and the insight.

And the basic parts is your problem should be pretty big, pretty pervasive, have a lot of these characteristics to make it feel like there's a very big market that A lot of people have the problem.

The only thing you need to know about the solution is that you should not start with a technology.

And lastly, you're looking to have something that's gonna make your company unique and have some kind of unfair advantage that we call an insight that will show why your company will grow faster than other companies.

I talked about 5 different types of unfair advantages that your company can have, and kind of what are the benchmarks for meeting them.

Now, the thing to keep in mind about understanding and creating this startup idea is that I don't need you to do all of the work, to lay all of that out in detail.

That's stuff that you'll kind of want to know or keep in mind, but a really good investor will do that on their own.

They'll hear what you're talking about and extrapolate.

And so what I'm gonna cover in this presentation is how do you package up that hypothesis?

How do you take all the things that you understand about your company and your startup idea, and I present it to an investor so that they can make a decision that's in your favor.

This is the YC startup application, and basically, this is the application, all the questions that we ask that YC partners will use to evaluate your startup.

So down here, when you're filling out the YC application, we actually link to a couple of things, and 1 of them is how to apply successfully.

I can't tell because I read so many applications, but it feels like founders are not reading that essay.

It was written by Paul Graham in 2009 and almost everything in there still holds to this day and people still make mistakes from it.

So I'm just going to point out some stuff and really punch it in here while I have your attention.

Basically, we believe for every company that we will interview at YC, we bet there's probably another company that's just as good as them out there, but they messed up on the application and we didn't realize it.

And basically, the reason is because they didn't express their idea clearly.

Like, you might think, oh, I didn't show off all that complex stuff about my startup idea, and that's why they didn't pick me.

And so the first thing I want you to keep in mind is I do not need you to sell me as a YC partner.

A good investor, so average investor, what they do is they talk to you when you tell them about your idea and it feels like they're poking holes.

All the questions they ask about what's all the reasons why this could go wrong.

A good investor does it the other way around.

They hear what you say and they imagine and they use their optimism and they use knowing that some kind of rare event has to happen for you to become a billion dollar company and they try to imagine all those rare events that could possibly happen to you, and then they pitch that path back to you.

And so we are really good at selling ourselves, so you don't need to do that.

And the thing is, you guys are kind of bad at selling things in the beginning, right?

And what I need you to understand is that I'm trying to evaluate these 3 statements when I'm hearing your idea.

Do I like the team and do I want to work with them?

In your weekly updates, when you do your group sessions, these are the questions that we ask you to ask 1 another.

It's basically the questions that we're trying to figure out for ourselves, and we're hoping that every week when you talk with other companies, you are practicing getting feedback and understanding whether you're able to instill this in other people.

These are the only 2 things we're gonna focus on today.

What do I put in the what's my company going to make?

How do I describe my company in a very efficient manner?

The reason we focus on this is because a clear idea is a foundation for growth.

And what I mean by that is that the best companies in YC or around the world grow organically.

It's basically I talk about your company, what you're doing, making, etc.

And I'm the most interesting person at the dinner table.

And I tell it to other people, and those people want to tell other people.

Word of mouth is something where I remember what you do, I talk about it enthusiastic, and it spreads on its own.

Marketing and advertising, it's a tax I believe companies pay because they did not make something remarkable.

Now, before anyone can remember at the dinner table what you do, they have to understand.

And so I have very simple rules for how to make things easy to understand.

This will sound familiar if you're familiar with an essay I wrote on how to design a better pitch deck.

And I'm going to focus on basically saying that the way I talk about designing a pitch deck actually works for ideas and lots of other things.

And so the way I make things easy to understand on a pitch deck or a slide is to make it legible, I make it simple, and I make it obvious.

In today's presentation, we're just going to focus on making your idea legible.

Now in my essay, I talked about how at demo day when our startups are presenting to a room full of a thousand investors, it's kind of an interesting audience.

Number 1, the audience is filled with really old people.

They tend to not have very good eyesight as a result.

They all can't sit in the front row like you lovely people.

Some of them have to sit in the way back and stand up.

And that means if you create a legible slide, they have to be ones that even old people in the back row with bad eyesight can read.

Now how does that apply to a legible idea?

Well basically you are designing a slide that democratizes the idea, right?

And so people who are blind or people who are ignorant, you're basically designing something for everyone in the room, not just the ones in the first row.

So a legible idea can be understood by people who know nothing about your business.

That will make things very clear to the widest possible audience.

Now this is super important because you will talk about your company more than anything else.

It is actually the thing that we are really great at at Y Combinator.

We have our companies constantly practice talking about their startup.

Startup school curriculum is designed around helping you constantly practice talking about your startup.

And this is because you are going to need a lot of people if you're going to become a billion dollar company.

So you are trying to find a co-founder, you have to have a way of talking about your company clearly Whether you're getting users or investors or employees or shareholders, you have to get really good at this and you have to be able to do it quickly and efficiently.

Here are things to avoid that makes things not clear, that makes your idea muddy.

So that's like obviously the opposite of clear or straightforward.

And therefore, it might take a question to understand what you do.

So I have a very specific definition of complexity.

And so if you look at the root word, simple and complex come from the same root and having to do with twist or braids.

Things that are simple are ones that have 1 braid, and things that are complex have multiple braids.

A simple idea is 1 idea that does not fold.

A complex idea are ideas that are intertwined.

So Simplicity means you are not trying to mix a bunch of things in your description.

So this is an odd 1, but what I mean is anything where it's like, I'm not gonna understand what is going on when you're talking about your company.

Any words that I don't understand, anything that's fake, like indefinite pronouns.

So if you just use this, it, et cetera, and you don't describe what those nouns are, and then things that you just suggest but aren't explicit about.

And so what I mean by that is there is some language that we will just ignore.

So in UX design, people will create a sort of blindness to things that they don't want to look at or they don't find to be of important value.

So for example, ad blindness is a big 1 that people sort of understand.

And the thing is, when you're talking about ideas, there's a way of using language that is also easily ignorable.

Things that just won't stick in your head.

There's probably lots of stuff that you heard about that.

MBA speak, weird kind of like puff yourself up.

Talk that doesn't give any extra information.

And so when you say certain types of words that as an investor I've heard over and over again or I will equate with 0 information or value, then I will ignore them and the result is parts of your pitch will end up being not even heard by me and therefore I will not remember them.

A great pitch is 1 where you can tell it to your mom and she gets it, she's proud of you, right?

And that means it's gotta be conversational.

And that's really good for word of mouth because we talk in normal conversational speak.

Words that are only understood or used by your industry.

We'll have some examples of this, but if you wanna be clear, let's go straight to what you wanna talk about.

Let's not have a winding path to eventually getting there.

And the last 1, this one's a big 1, is being reproducible.

So, when I hear your idea, can I imagine it in my mind?

Can I see what I would have to build to create your company?

If I don't have that, then I have no picture in my head about what your company does, and until I have that picture, I can't ask any of the questions that helps me understand if I'm excited about you or understand other nuances of your business.

To make things reproducible, I need to know nouns.

I need to have objects that I'm gonna imagine in my head.

And there's 3 types of nouns that I should understand from your startup idea.

The 2 are kind of related to the market, right?

But I should have these kind of 3 nouns in my head.

Says, we are going to transform the relationship between individuals and information.

Number 1, all the nouns that you see down here are abstract, they're ideas.

I still have to ask questions to answer the 3 nouns that I need to have.

We will see stuff that starts like this when we ask, describe what your company is going to make.

I don't even want to read it, but basically, it starts talking about the story of the company, or basically, because in the beginning, there was this problem, and we're going to go through this issue, right?

And then there's these bad guys and they showed up but then who's going to save us?

We're finally here to save and you're like, I have to read another thousand applications.

This is the description on the actual application that Airbnb put to YC.

Airbnb is the first online marketplace that lets travelers book rooms with locals instead of hotels.

I understand what they're building, have a sense for what they're making, and then I can start thinking about my other 2 ideas of whether I'm excited about it, and then am I gonna like this team?

Synchronizes files across your or your team's computers.

The thing about this is it's refreshing, but also there's no pretense.

I see a lot of company descriptions where they're like, I'm worried about this, or I've gotten this kind of feedback.

And so they give up clarity to make themselves look bigger and blow themselves up or make themselves try to look more interesting.

They're trying to protect themselves against something away ahead of time.

And the whole problem is usually what it ends up doing is it brings me farther away from you, all that padding that you've put on yourself.

Here's a description from a company in the current batch.

Lumini is building X-ray vision for soldiers and first responders.

We don't have to go deep into the details.

I don't need to understand how they exactly do this, et cetera.

This creates a foundation for my curiosity.

Now I will start from here to try to figure out, oh, how do they do this?

I start going down the route of asking all the right questions based off this 1 description.

So Vahan in the current batch is building LinkedIn for the next billion internet users.

So, doesn't perfectly connect me to what they're sort of making, but I'm intrigued.

I'm excited about someone building into LinkedIn, and I know it's some kind of social network for business people, and so now I'm curious about how.

I don't need you to answer how in the description, but I understand what you're doing, And then now I can start making questions in my head about how would I evaluate whether this is working or successful or promising or not?

Do they have a certain amount of traction, et cetera?

Now the reason I've used this example is because we have a lot of companies who try to use the X for Y.

And what I mean by that is like LinkedIn for whatever, or Uber for blank, or Airbnb for blank.

And so that X for Y is super useful because it allows you to shortcut business model and some kind of complex behavior, right, and then attach it to some other vertical or something that you're trying to make work.

X for Y is okay, but most people abuse it or do it incorrectly.

This should be like a billion dollar company, right?

You can't use your uncle's pet shoe store as the X for this because people don't know your uncle's pet shoe store and they don't know if it's successful or not, right?

So everyone, As many people should know about this as possible, and for an investor, it should be clear that it's a billion dollar company or opportunity.

Everyone has to agree that it is successful.

So you could have a really big X, everyone knows about it, but it's infamous, right?

So people don't think it's successful, So be careful of that.

So is it really clear why the target that you're going after wants this kind of model applied to it?

This kind of solution applied to it, whether it's Airbnb 4, Airbnb or Uber 4, et cetera.

It should be really clear that that's a segment that's either missing it, is not being served well by the other 1, and also that those people want to have that kind of model.

And then the third 1 is, why should be a huge market?

So if you're building X for Y, and then the last part doesn't sound like a really big business, that's not gonna work well for you.

Right, because what we want, because you're essentially saying that you are something, but that's a subset.

And what we want to make sure is that subset feels like it could be really, really big.

If you choose a subset that sounds like it's going to be really, really small, investors won't be as interested.

It means that I'm worried that you will not have enough potential headroom to grow to become a billion-dollar company.

So we had a company in the batch that started off by describing themselves as buffer for Snapchat.

Buffer is a nice company, but definitely smaller than Snapchat.

That stuff gets in the way of your clarity for the most part.

I'll read like a thousand applications every single batch.

Basically, even though it's my job, it's really, really difficult to have that much focus and attention across all these different applications.

What we want is that when I bring up your application and I'm looking at it, let's make our intimate time really pleasurable.

Let's make the time that I spend on an idea Very efficient.

I'll look at it, I'll understand really clearly, I'll move around your application and be like, oh, I'm kind of excited, maybe there's gonna have this.

And I'll look at that part, I'm like, oh, they do have it, that sounds awesome.

What we don't want is me to go like, oh, I don't know what, what are they talking about?

Then I have to go to your website, I'm like, don't know what they're talking about, I don't know how this sort of works, I go back to it, I try to figure something else out, I try to see if some other partner might understand what you're doing, etc.

Where is there going to be room for me to get excited as a result?

So to be efficient we need to be concise.

The best way I want to keep this in mind is to use some examples.

And so here's some things I need you to keep in mind.

Yes, I want you to be concise, use as few words as possible.

And what I want you to understand is the concision is actually gives me secondary information about you as a team.

It lets me, 1, know that you have thought deeply about your idea.

Because you've thought so deeply about it and because you've practiced talking about it so much and you've gotten really good at getting people excited and understanding your thing really quickly, you probably have figured out how to do it in a short amount of time.

So it lets me know that this is a founder that has thought deeply about the idea.

The other thing about being concise, it shows me that you are efficient.

And if you are efficient with your words, then you're probably efficient with your thoughts.

And that means you're probably also efficient with your actions.

And what that means is that I will start to believe that you understand what is most important about your business, you understand and communicate it clearly, and you might actually know how to always figure out the most important part of what to do about your company, to make it grow, to make it work, et cetera.

So there's some minimum stuff that we wanna have, even though we're trying to be as concise as possible.

So if we're so concise that I can't understand these, then your concision is too much.

The other is, I want to get to this point when I read the concision or this short version of whatever it is you're talking about.

Because again, I know there's like a hundred thousand reasons why your company is great, but when I'm reading your application, I'm only going to maybe remember 2 to 3 of them.

And so we have to try to make sure those most important ones come up to the top.

This is a real startup school company description.

I can picture what it is, but again, it's not a description that helps me get excited about it.

It doesn't help me lead to all the other things.

I have to do now more work to understand why this is fast growing and has potential.

I also don't know, based on this, some nouns.

I don't know exactly who the customer is.

Is it people that they're selling stuff to or are they making an e-commerce store for other shop owners?

This is most of the descriptions that we see on startup school.

It makes it really, really hard for us to understand it.

I don't even understand what the problem is that they're solving based off of this.

And so, is it because a lot of people have non-merit?

Basically, I have to ask so many questions in my head to figure out why did they get to this sort of description.

Learn and sharing knowledge about data science and artificial intelligence.

I can't tell what the product is and how they're sorting to go about it.

If I had 10 companies build based off this description, you'd have 10 very different products.

The other thing that's odd about company descriptions is you guys tend to capitalize and make proper nouns very weird words and phrases.

It's not like a magazine title and it makes me think sometimes you're emphasizing the wrong things.

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Kevin Hale - How to Pitch Your Startup