Anu Hariharan

Partner, Y Combinator Continuity

THIS CHAT HAPPENED ON September 28, 2017

Discussion

Anu Hariharan@anuhariharan · YC Continuity
Hi - I'm Anu Hariharan, partner at Y Combinator and former partner at Andreessen Horowitz. My specialty at YC is advising and investing in growth stage companies (Series B and later), and I have done extensive work with companies who are interested in network effects and growth programs. I welcome any questions on either of these topics, or anything I can answer about YC.
When it comes to in-person service marketplaces, would you say penetrating a few markets heavily makes more sense (depth) or going for a wide approach to grab new markets makes more sense (breadth)? Assuming launching new markets is not costly to the business, the average order price is low, and expansion can operationally be done in a healthy manner, do you recommend doing that?
Anu Hariharan@anuhariharan · YC Continuity
@samyr Great question. The key is to make sure you have one market working and sort of a playbook figured out before you launch the second one. If you are growing really fast in one market but retention is poor and you have a leaky bucket problem, then take time to figure that out before you expand. Too often companies expand to multiple markets an see "good growth" but hit a plateau soon because they haven't yet figured out how to retain them and demonstrate consistent solid growth.
@anuhariharan thanks for that! retention is what we try and focus on :)
Nick Abouzeid@nickabouzeid · Words at Product Hunt ✌️
What is the best advice you've ever received and how did this impact you?
Anu Hariharan@anuhariharan · YC Continuity
@nickabouzeid That is a tough one as I have received a lot of good advice over the years. The one that comes to mind is the one my dad told me - "Never let anyone tell you what you can and cannot do" :)
StartupSanatana@startupsanatana · StartupSanatana
@anuhariharan That shows that; You are Dad's Dearest Daughter. 🙂👍👏
Kevin Lou@kevinbryantlou · Founder, Anytable 🍜
@nickabouzeid @anuhariharan Great words to live by 💪
Irv Chin@irvnyc · Founder, Tassel Software
Hi Anu, if the bottoms up analysis of addressable market size for a company's initial entry product is small, but the broader market potential of a full suite is larger, how can we present that correctly to investors?
Anu Hariharan@anuhariharan · YC Continuity
@irvnyc I call this the bowling pin strategy. Most startups start with a niche market. You have to because otherwise you will be boiling the ocean and it takes that much longer to get to product market fit. The key thing you need to demonstrate is how you plan to win that niche market and what will you do in terms of product enhancements to get to the next niche market.
Irv Chin@irvnyc · Founder, Tassel Software
@anuhariharan This is awesome. Thanks so much Anu
Kevin Lou@kevinbryantlou · Founder, Anytable 🍜
@irvnyc @anuhariharan I love the "boiling the ocean" comparison here! It drives the point home that winning a niche market is where most companies need to start.
Dylan Bathurst@dylanbathurst · Engineer @PurseIO
Thanks for doing a chat Anu! Given your experience with marketplace companies, what would be your advice to them in terms of metrics and KPIs? Like, which metrics are most important and which tools work best to track them?
Anu Hariharan@anuhariharan · YC Continuity
@dylanbathurst Marketplaces have a chicken and egg problem. Therefore in the early stages it is really about top line GMV growth (as both sides need to work) and retention. If you have strong product market fit, your product will be on fire!
Bala S.@leanux_bala · Find Traction For Your Startup.
Hi Anu, thx for the chat! Could you pls share some examples around 'Network effects & Growth programs' from your own experiences?
Anu Hariharan@anuhariharan · YC Continuity
@leanux_bala I love both of these topics! One of my favorite learnings from the Growth Guide we just put out was that there are VERY strong themes between the companies who’ve seen great growth in terms of internal teams. Here’s the link to that post, btw if you haven’t seen: http://blog.ycombinator.com/grow...
Emily Hodgins@ems_hodge · Operations @ Product Hunt
Hi Anu, what in your experience is often overlooked when companies starting planning their growth programs?
Anu Hariharan@anuhariharan · YC Continuity
@ems_hodge Are you referring to growth programs?
Emily Hodgins@ems_hodge · Operations @ Product Hunt
@anuhariharan yes! 🙈 Typing fail.
Anu Hariharan@anuhariharan · YC Continuity
@ems_hodge Ha no worries! Just making sure. The biggest thing that’s overlooked: Retention. MOST companies should not spend significant dollars or large scale on acquisition until they’ve proven they can retain customers. It’s the classic “leaky bucket” issue, but is a very easy mistake for companies to make. Second mistake they do is hiring someone and not really aligning on goals and how this person should work with product/marketing.
Manny Martinez@mannymsf · Founder of Campus Zone
Do you ever accept companies that might compete with one another in terms of functionality?
Anu Hariharan@anuhariharan · YC Continuity
@mannymsf This page, maintained by my partners in our main YC program, tackles that one: https://www.ycombinator.com/faq/#q8
Ryan Hoover@rrhoover · Founder, Product Hunt
Hi, Anu! YC's evolved quite a bit since we went through in S14. Where do you see the YC Continuity fund heading long term? What do you think might change?
Anu Hariharan@anuhariharan · YC Continuity
@rrhoover Hey Ryan! If you think of YC like a university, the Continuity team is like graduate school. We're here to help startup founders through their second job as CEOs: scaling their companies. We do that with advice and we do that with investment.
Ronma Adedeji@ronma · Product Manager at SpineIntel Labs
what chances do third world start up products have, especially in a situation when i am recommending a product that does not dwell in the investors reality.
Claudio Fuentes@claud · Unvolve
What is the youngest founder YC has funded - how do you establish credibility with limited prior experience? Furthermore, when ideas are in their infancy, prior to traction, what indicators do you pay attention to the most when deciding if the team is worth investing in? Thanks for your time Anu!
Anu Hariharan@anuhariharan · YC Continuity
@claud My Partner Michael has talked about this quite a bit in this post here - https://blog.ycombinator.com/thr.... It is all about the team, the idea maze they went through and whether they have the perseverance to commit to what they are working on. Experience is not a good indicator.
Rishabh Singh@rishabh_singh
Hi Anu! What advice do you have for companies trying to minimize acquisition costs with a fragmented, international user base/market? (for instance, international students from India, China and the like applying to universities in the US/UK/Europe.)
Anu Hariharan@anuhariharan · YC Continuity
@rishabh_singh Strong product market fit is the best way to reduce acquisition cost. If you find a group that loves your product, then they’ll be compelled to share it with people in their networks with a similar problem.
Anu Hariharan@anuhariharan · YC Continuity
@rishabh_singh Youngest founders were in our last batch: https://www.cnbc.com/2017/08/11/...
Oliviax@oliviameng
Hi - Anu, thanks for being here. What are the most sought qualities for women who want to enter VC? Is it the academic background or personal connection? Thanks!
Anu Hariharan@anuhariharan · YC Continuity
@oliviameng I had ZERO personal connections in the VC world. It is all about being proactive, demonstrating strong interest in startups, and ability to work with really great startups and founders. Depending on the stage of the investing (early vs. late), skill sets tend to differ.
Evan Farrell@evan_farrell · Lead Backend Developer, Scholarly
We run a brand ambassador program for our startup, we have over 50 active ambassadors throughout Canada. Right now we've spent $0 on the program as we've offered in-site incentives as rewards so far. The program has driven 80% of our growth this month, but ambassadors are starting to look for more rewards (swag etc) but since our conversions are so low, we don't think the growth per ambassador can be worth giving them serious rewards. Should we be okay to lose money to appease them to continue to grow faster, or should we stick to paying as little as possible?
Niv Dror@nivo0o0 · VC at Shrug Capital
Hey Anu! Thanks for joining us :-) What made you want to make the switch from a16z to YC Continuity? Also, how do you think about the skillset one needs to do well as an early-stage investor, versus more on the later-stage like the Continuity fund?
Anu Hariharan@anuhariharan · YC Continuity
@nivo0o0 Great question. Both are amazing platforms and I am lucky to have the opportunity to work with both. YC is widely knows as the best accelerator in the world and the opportunity to build YC Continuity and further enhance our growth stage founder community is an opportunity I couldn't refuse.
Anu Hariharan@anuhariharan · YC Continuity
@nivo0o0 Early stage is all about founders as ideas change and they are still iterating on product market fit and later stage involves at looking at a few more things (especially strong product market fit and strong ability to scale). Team is equally important as well.
Andres Destefanis@andresagustind · CEO & Co-F dbug.io, CEO Red Point Labs
Hi Anu! Thanks for your time today. What’s the most important stuff that we should include in every presentation deck and which are the key items you think are important to move forward with any prospect. Thanks!!
Anu Hariharan@anuhariharan · YC Continuity
@andresagustind What type of presentation? Pitch deck?
Andres Destefanis@andresagustind · CEO & Co-F dbug.io, CEO Red Point Labs
@anuhariharan yes! Pitch decks.
Anu Hariharan@anuhariharan · YC Continuity
@andresagustind It totally depends on stage. For Series A - three most important elements are Team, Product (what pain point is it solving, why is it 10x better than existing solutions), traction to date, how big of a market opportunity is it, roadmap, use of proceeds, how you plan to spend the money and what milestones will you hit over the next 18 to 24 months
Andres Destefanis@andresagustind · CEO & Co-F dbug.io, CEO Red Point Labs
@anuhariharan great info! Really appreciated.
Martina Grgic@martina_grgic · Co-Founder, Smart Lumies
Hi Anu. What do you think the biggest difference is between a seed stage company and a Series B company? (besides the amount of investment)
Anu Hariharan@anuhariharan · YC Continuity
@martina_grgic If you have a strong product market fit then the real difference between whether a company succeeds from phase 1 (early stage) to phase 2 (growth stage) is how well the CEO adapts to the second role. My partner Ali wrote a great post on this topic. http://blog.ycombinator.com/the-...
StartupSanatana@startupsanatana · StartupSanatana
Do you see New Kind of "Network Effects" from the perspective of AI, Deep-learning, Cognitive Services, ... etc.,
Anu Hariharan@anuhariharan · YC Continuity
@startupsanatana Yes I call that "data network effects", TouTiao (an app in China) has done this really well. They use AI to power recommendations and the more data they have on the user, the better the recommendations. That has given them a strong competitive moat in spite of not having access to a social graph.
StartupSanatana@startupsanatana · StartupSanatana
@anuhariharan Thanks; Curious to know like; How AI would change the patterns of "network effects" :-)
Anu Hariharan@anuhariharan · YC Continuity
@startupsanatana When you say pattern, what are you referring to? In general the reason why most people look for network effects is because it has the ability to create or tip winner-take-all markets. With AI you see data network effect - the more users use your product, the more data they contribute, the more data they contribute, the smarter your product becomes (which can mean anything from better recommendations, more personalization, etc.)
StartupSanatana@startupsanatana · StartupSanatana
@anuhariharan True; Pattern means New "Trends" THX. :-)
Rohan Bhatore@peaceachhe
What is your investment thesis?
Anu Hariharan@anuhariharan · YC Continuity
@peaceachhe We look for a bunch of things (strong product market fit, ability to scale, team, traction to date, vision) when investing at the growth stage (no one particular thesis).
Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
What experiences have helped shape the way you approach decision making?