40 questions from Y Combinator to crash-test your startup
Questions. We answer hundreds of questions every day. Some are minor and have no special meaning, some require us to make decisions, and some make us think carefully. If you are running a startup, you should make decisions and answer questions much more than anybody else — to employees, clients, partners, investors, and it's just at work.
If you get lost in your daily routines or if operations take up all your time, try to stop and ask yourself the right questions. You know, sometimes answering the right questions can help you clarify what you are doing and where you are going now. If you haven’t started your startup yet, it’s the best time to answer all this list.
As anyone involved with startups will tell you, the focus is key to success. In this article, we gathered some insights from Michael Seibel, CEO at Y Combinator & co-founder of two startups – Twitch and Socialcam. These questions can bring all aspects of the startup into alignment and show what you need to accomplish to ensure the success/survival of your venture.
All questions are split into the groups: Problem, Customer, Product, Performance, Product Development. Let’s describe each group to make it clear.
1. Problem
The real talent in all entrepreneurship, not only in tech startups, is finding the right problem. Once the problem is correctly identified and understood, building the right solution that will lead to a business is much easier. Truly identifying a problem means looking deeper at the symptoms, the customer, the impact, the alternatives, the opportunity, and the relationships between them, while avoiding the “solution bias” (often known as “The issue is that the customer does not use my solution”).
Take a look around at the products and services you are currently using and surrounded by. Why are they there? Because they are solving a problem or filling a need, you would otherwise be experiencing. This is how all great inventions and startup businesses are born – from a problem or need.
Startup founders can often find themselves working on an idea that sounds plausible, but does not provide a solution to a problem people care about in a meaningful way. Y Combinator founder and investor Paul Graham says that often, these startups are born from individuals who are simply “trying to think of startup ideas” and not looking for problems. Graham calls these ideas “made-up” or “sitcom” startup ideas, as they sound like something a writer for a television sitcom would come up with when creating a script for a character that had a business idea. The idea seems possible, even though, in reality, it is bad, and no one would use or buy it.
“The verb you want to be using with respect to startup ideas is not ‘think up’ but ‘notice.’ At YC we call ideas that grow naturally out of the founders' own experiences ‘organic’ startup ideas. The most successful startups almost all begin this way.” - Paul Graham, Founder of Y Combinator.
And often, these ideas begin with someone trying to solve an organic problem for him or herself. A good example is Netflix. Netflix founder Reed Hastings started his service in 1997 after paying a $40 late fee for renting Apollo 13. In Hastings’s mind, having to go to the store to rent and return movies, especially when late fees are involved, is a pain. The rest is history.
2. Customer
A young product can’t satisfy the needs of all the market. And you don’t need all the market at the start. Identify who is your ideal customer. You need to find people, who are literally suffering now without your product, because substitutions that they use are bad, take a lot of their time, incomplete. People who really have pain, they will pay you for a solution, and tell what you need to add to the product to make it better. People who look like interesting, but not sure, are not your ideal customer. Leave them for later, when you have a critical mass of ideal users. We have already covered this topic in our blog earlier this year - https://www.molfar.io/blog/who-is-your-customer.
3. Product
The goal of any early-stage product (or MVP) is to achieve these three things: 1)Verify that the solution solves the problem you're attempting to address; 2)Confirm that your future customers value the solution; 3)Determine whether or not people will pay for your solution. The purpose of building an MVP is to get the minimum version of the product to the market. This way, you'll get to know whether it has any value at all. And if it does, you can start making money right away from your first customers, the early adopters. If you see that something doesn't work, probably you made a mistake in identifying the problem, or customer segment, or your product doesn't satisfy your customers on solving their problem. To find it out, you need to talk with clients, measure analytics, and test hypotheses.
If you want to hear a magic formula on how to achieve it, here it is — build products, talk to users, eat, sleep, and nothing else. A founder’s goal is to make something that users love. It’s better to build something that a small number of users love, instead of something a large number of users like. If you make something people love, they will tell their friends about it. Over the long run, great products win. Start something simple, talk to users, don’t use AdWords, just go talk to people around you. Get users manually. You have to do sales and customer service yourself.
4. Performance
An idea is worth nothing. A problem is worth nothing too. Performance means everything. Two different startups can work on the same problem, but one can be very successful with millions of users growing 10% per week, and another can die in several months. You know why? Because the only thing that really matters in this industry is performance. Always remember — the main idea behind the startups is learning. Learning about customers and what product they will love. And then — building such a product for these customers. The way you execute it (how fast and productive) identifies your success.
5. Product Development
Product development is about rapidly iterating, measuring, testing, and improving your product while fully engaging your team. This is not the same as shipping an MVP. You’ve released an MVP and are figuring out what to do next (remember, yes? — the main idea behind the startups is learning), which is where most startups spend most of their time. Michael Seibel wrote a great post describing this process for beginners.
Ok, now you know the five fundamental categories for each startup: Problem, Customer, Product, Performance, Product Development. It’s a time for the full list of questions for each category. Answer on all of them fairly. Don’t shy to be honest, at least with yourself.
THE LIST OF QUESTIONS FOR STARTUP FOUNDERS:
1. Problem
What problem are you solving?
What problem will be solved at the end of what you are doing?
What do we expect the result to be?
Can you state the problem clearly in two sentences?
Have you experienced the problem yourself?
Can you define this problem narrowly?
Who can you help first?
What can we address immediately?
How do we get the first indication this thing is working?
Is the problem solveable?
2. Customer
Who is your customer?
Who is the ideal first customer?
How will they know if your product has solved the problem?
How often(frequency)does your user have the problem?
Who is getting the most value out of your product?
How intense is the problem?
Are they willing to pay?
How easy is it for your customer to find your product?
Which customers should you run away from?
3. Product
Does your product actually solve the problem? Be truthful. How and why not?
Which customers should you go after first?
How do you find people who are willing to use your“bad”first versions of your product?
Who are the most desperate customers as how do you talk to them first?
Whose business is going to go out of business without using you?
Are you discounting or starting with a super low price? Are you consider this approach? If so, why?
4. Performance
What are you using to measure how users are interacting with your product?
What 5-10 metrics are you measuring to understand how your product functions? Why those metrics?
When you build a new product or feature, what is the metric that will improve because of that feature/product?
What number do you track to show how well your company is doing?
What is your top level KPI(revenue,usage)?
What are the underlying metrics that contribute to achieving your top level KPI(newusers, retention of users, content created => DAUs at Social Cam)?
Which of these metrics are you trying to move this development cycle?
5. Product Development
How long is your product dev cycle? What is causing it to be that long?
Who is writing down notes at your product dev meeting?
Which category does each of your brainstormed ideas fit: New features/interactions on existing ones; bug fixes/other maintenance; A/B tests?
How easy/medium/hard are they to do?
How can you restate the hard ideas (disaggregate idea into smaller ideas)?
What parts of hard ideas are useless or hard? Are there other options?
Which hard idea will improve act the KPI the most? Which medium? Which easy?
What is the spec for the product/feature we want to build?
Here is it. 40 real questions to crash-test your startup. Answer them all.
If you have any questions for us - feel free to write us. We offer free consultations for startup founders. Just book your time via the contact form.