Anu Hariharan

Anu Hariharan

Partner, Y Combinator Continuity

THIS CHAT HAPPENED ON September 28, 2017

Discussion

Anu Hariharan
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
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
Nick Abouzeid@nickabouzeid · Content @ Emergence Capital
What is the best advice you've ever received and how did this impact you?
Anu Hariharan
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 · StartupSanatana
@anuhariharan That shows that; You are Dad's Dearest Daughter. 🙂👍👏
Kevin Lou
Kevin Lou@kevinbryantlou · Founder, Anytable 🍜
@nickabouzeid @anuhariharan Great words to live by 💪
Irv Chin
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
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
Irv Chin@irvnyc · Founder, Tassel Software
@anuhariharan This is awesome. Thanks so much Anu
Kevin Lou
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
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
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.
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
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 Snowdon (née Hodgins)
Emily Snowdon (née Hodgins)@emilyjsnowdon · Operations @ Product Hunt
Hi Anu, what in your experience is often overlooked when companies starting planning their growth programs?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@ems_hodge Are you referring to growth programs?
Emily Snowdon (née Hodgins)
Emily Snowdon (née Hodgins)@emilyjsnowdon · Operations @ Product Hunt
@anuhariharan yes! 🙈 Typing fail.
Anu Hariharan
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
Manny Martinez@mannymsf · Founder of Campus Zone
Do you ever accept companies that might compete with one another in terms of functionality?
Anu Hariharan
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
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
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 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
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
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@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
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
Anu Hariharan@anuhariharan · YC Continuity
@rishabh_singh Youngest founders were in our last batch: https://www.cnbc.com/2017/08/11/...
Oliviax
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
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@evan_farrell · Tech @ ScholarMe
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
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
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
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
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
Anu Hariharan@anuhariharan · YC Continuity
@andresagustind What type of presentation? Pitch deck?
Andres Destefanis
Andres Destefanis@andresagustind · CEO & Co-F dbug.io, CEO Red Point Labs
@anuhariharan yes! Pitch decks.
Anu Hariharan
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
Andres Destefanis@andresagustind · CEO & Co-F dbug.io, CEO Red Point Labs
@anuhariharan great info! Really appreciated.
Martina Grgic
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
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 · StartupSanatana
Do you see New Kind of "Network Effects" from the perspective of AI, Deep-learning, Cognitive Services, ... etc.,
Anu Hariharan
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 · StartupSanatana
@anuhariharan Thanks; Curious to know like; How AI would change the patterns of "network effects" :-)
Anu Hariharan
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 · StartupSanatana
@anuhariharan True; Pattern means New "Trends" THX. :-)
Rohan Bhatore
Rohan Bhatore@peaceachhe
What is your investment thesis?
Anu Hariharan
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
Jacqueline von Tesmar@jacqvon · Community at Product Hunt ⚡️
What experiences have helped shape the way you approach decision making?
Twain Murua
Twain Murua@twainmurua · CEO @ Flavorite
Hello Anu! What growth and retention metrics do you recommend tracking for a startup?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@twainmurua Depends on the type of company. Is there a specific industry you are interested in? But at a high level most important to track monthly or weekly growth of the core metric you care about. Retention is all about how often your customers come back to use your product.
Twain Murua
Twain Murua@twainmurua · CEO @ Flavorite
@anuhariharan Thanks on your answer. We are creating a startup that gives dish recommendations to people based on their tastes and eating patterns. Right now we are creating the Android app. But we have to prioritize, which metrics should we track. What do you think of the following metrics? http://jwegan.com/growth-hacking...
LukeFernandez
LukeFernandez@lukerfernandez
Hi Anu, thanks for your time! Three questions: 1) Should startups raise more money than they think they need? Reid Hoffman mentions this in Masters of Scale, sparking interesting debates from others (Tim O'Reilly, etc): https://twitter.com/timoreilly/s... 2) When should teams bring on a member whose sole focus is to raise capital? When should they not? 3) What investor characteristics should teams consider when seeking capital?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@lukerfernandez 1) It depends on the type of the company. If the company needs to scale really fast and economies of scale is the key differentiator, it does make sense for companies to raise a bit more money than they need. For example for most on demand companies, it is a city by city build and if you don't scale fast enough there will be another competitor in different regions. If you are building a product like social network whose growth is really due to the organic consequence of its use (e.g., Facebook, WhatsApp), then I would argue that you actually should not raise too much money. Because having a lean team and really focusing on the product might help you tweak the product to get strong product market fit in the early days. If you have a lot more money in this scenario the tendency would be to throw cash on acquisition and hiring more than needed (both of which might negatively impact the progress)
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@lukerfernandez 2) I don't think it makes sense for companies to bring a member whose sole focus is to raise capital. In the early days the CEO should be directly responsible for fundraising. As you scale, your CFO steps in to do that. I have seen exceptions only with companies in the "hard tech" space since they need to raise tons of capital early on. Even then it is typically a VP of finance who helps with fundraising and other efforts internally.
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@lukerfernandez 3) It is all about the Partner you are going to work with. This is likely a 10+ year relationship especially if they are on your board.
Ishan Shrivastava
Ishan Shrivastava@ishan_shrivastava · Cofounder - Indiez.io
Hi Anu! What do you think about the rising data capitalism?
KELLI DAWN
KELLI DAWN@krazyskibunnie2 · 🥕Rewards4EatingHealthy 🥕
An How do I make the funding jump?
Matthew Miller
Matthew Miller@matthewjmiller07 · AI Research Analyst, CognitionX
When looking at AI startups, how do you weed out the pretenders from the contenders?
StartupSanatana
StartupSanatana@startupsanatana · StartupSanatana
As per YC "Out Reach" Program - http://bit.ly/2wZLZXI , Is there any possibility of supporting Startups on Specialized "Culture(Value Based)" based Startups (either in India or elsewhere ...)?
Eran Hirsch
Eran Hirsch@hirscheran · Entrepreneur
Hi Anu, Currently, we are working on a project that is still in a very initial stage but received good feedback. Is there any chance to get into YC with only a prototype and a pitch deck? It seems you need to prove traction which we don't have yet. To be specific, we want to create alternative data for crypto investors looking to stay updated. This is the prototype https://solume.io
Prakhar Shivam
Prakhar Shivam@prakharshivam · Stay hungry, stay foolish.
Hi, ma'am! I would like to ask you that, how mobile learning platforms can leverage network effects, not just in terms of user engagement but also in terms of learning outcome? And do you think that adding a social structure around a mobile learning platform can leverage network effects?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@prakharshivam For a network effect to really be in play, each additional user needs to add value to the community as a whole. So follow up question to you: Do you see any early signs of network effects right now in your product?
Prakhar Shivam
Prakhar Shivam@prakharshivam · Stay hungry, stay foolish.
@anuhariharan As of now, my product is in the development phase, but I kept network effects in my mind while designing the product. It's like, we are sourcing quality content across a range of topics from the internet (using RSS) and recommending it to the user, based on his/her interests captured through a very visual psychological assessment carried out by a chatbot. Additionally, users can also build up their collections of content and can initiate discussion around that.
Tamer
Tamer@tamerzmorsy · Spotlight Cofounder
Hi Anu, thanks for the time and chat today. Do you have any recommendations for what a company should do between after the application deadline and when then invites go out? Is there something you recommend?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@tamerzmorsy Keep working on your product and talking to customers. That’s the single best thing any startup founder can be doing, whether waiting for a YC interview or not.
Tamer
Tamer@tamerzmorsy · Spotlight Cofounder
@anuhariharan Thank you!
StartupSanatana
StartupSanatana@startupsanatana · StartupSanatana
What Factors You Seriously Consider while performing the Product Revision Process after conducting interviews as the famous Sanskrit saying goes "Loko Binna Ruchi (॥लॊकॊ भिन्न रुचिः॥)" - which means people have different tastes...
Sathish Ganesh
Sathish Ganesh@sathish_ganesh · Chief of Growth
Hi Anu! What's the current focus of YC in India? What are the key segment's that YC is interested ?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@sathish_ganesh We are excited about the potential in India. At YC we don't focus on any specific regions. We are looking for great founders who are working on solving huge problems and welcome anyone to apply. On that note, YC applications are due on Oct 3rd.http://www.ycombinator.com/apply/ We are also planning on a fall tour in India end of October
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@sathish_ganesh Shameless plug :)
Jake Crump
Jake Crump@jakecrump · Community Team with Product Hunt
When it comes to growth departments for a startup - series B timeframe - where is the best place for this department to sit? Do you think of growth teams as cross departmental or standalone?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@jakecrump The most preferred set-up is to have an independent growth team that works closely with product. Ideally head of growth reports to the CEO.
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@jakecrump We covered this in our blog post as well. You can take a look here - http://blog.ycombinator.com/grow...
Jo Anna Norris
Jo Anna Norris@csketches · Chief Executive Curator, Csketches
What is the best business model for B2C?
EmbedAPI
EmbedAPI@embed_api · CEO @ EmbedAPI.com Embed Anything
HI Anu 1. What's the step by step to get funded by Y Combinator ? (a prototype or just a good be Business Model?) 2. Can you be funded if you can't get a US Visa? 3. Why very rare people in Africa get funded ?
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@embed_api On #1: There’s not a single answer to this, as there are a number of factors that go into who gets selected, not least of which is who you are competing against -- see this: https://www.ycombinator.com/whynot/ On #2: The YC program takes place in the U.S., so we do need to have the founders in the Bay Area for the program. More answers here: https://www.ycombinator.com/faq/... On #3: We actually had a pretty big spike in founders applying from Africa in the last one year. Please feel free to spread the word. We would love to see more applications from there as well.
Oluseyi Akinyode
Oluseyi Akinyode@seyi_akinyode · Founder @ Womally
Hey Anu! Thanks for stopping by. What's the best way to move from product to a platform or marketplace
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@seyi_akinyode The key question is what is your current value prop of the product (single player or multiplayer utility) and how do you plan to move it towards a platform or marketplace that makes the most sense. Facebook did this really well. They started off as a social network and launched platform with developers and apps in 2007
Oluseyi Akinyode
Oluseyi Akinyode@seyi_akinyode · Founder @ Womally
Thanks!
Alec Dickinson
Alec Dickinson@alec_dickinson · Ask, Build, Ship, Test, Repeat!
Hi Anu, thanks for doing this :) How important do you think it is to have a strong video strategy (content) across the major social media platforms in today's digital ecosystem? Do you think this can help drive user engagement, network effects and growth for a company? As an example: Posting video content frequently in FB (horizontal and square video formats), Instagram (portrait video stories, or square timeline videos), YouTube, Snapchat, etc. Leveraging each platform's content formats.
Anu Hariharan
Anu Hariharan@anuhariharan · YC Continuity
@alec_dickinson I think video is extremely important as a format today. There is no question about that. However when it comes to network effect - it is really only your product that can do that. The key test here is does your product become more valuable as more users use it. Another way to test this is the "barrier to exit for your existing user" really high?
Suraj Rajan
Suraj Rajan@rsuraj · Co-founder, invyt.in
What do you find to be a common trait/characteristic among teams that make it into YC ?
anurag kataria
anurag kataria@heiranurag · co-founder: HealthServe
Hi Anu, Why there is such a resistance in open source technology investments?
Theodore Angelus
Theodore Angelus@teddy777 · COO, TurnToTech
What are your thoughts on coding bootcamps? I've found that if hiring managers are out of a bootcamp themselves they usually will hire bootcamp grads. If the hiring manager has a CS degree and out of a traditional university, then they will not hire bootcamp grads. What are your thoughts on hiring bootcamp grads?
Jithin sha
Jithin sha@chirpingsha
Hi Anu, Do you ever accepts a hardware company that got only two client running a prototype of the idea. Thank you.
StartupSanatana
StartupSanatana@startupsanatana · StartupSanatana
Dear Mrs.Anu Hariharan, As part of Y Combinator Fall Tour 2017 ( http://bit.ly/2hyJCsH ), We would like to invite YC to @EntIISc / IISc. which is an Entrepreneurship and Innovation Cell of IISc.(Indian Institute of Science), Bangalore which is a Meritorious Place (No.1 Premier Institution which is dedicated to research and higher education in science, engineering, design, and management.)
Rigo Laborin
Rigo Laborin@rigolaborin · CEO, FuelSmart
Hi Anu, thanks for taking our questions... My Dad started a clean-tech company (waste water treatment) in Mexico about 20 years ago, starting from nothing with a few loans and friends and family money. He's been able to create a nice reputation for himself and the brand based on the quality of his work and performance, however, the company still runs as a start-up, with some thirty-some employees and focusing only on a small piece of the market due to lack of infrastructure and growth capital. What would be the top 2 or 3 suggestions you would give to a company that has assets such as brand recognition, a quality product and IP to grow and try and acquire a larger piece of the market or perhaps enter even new markets such as other countries? The idea wouldn't be to run like a major corporation, we still want to remain nimble, but still need some order and standardization in my mind to take this leap... Thanks for your thoughts!