20 VC 016 Y Combinator, Twitch.TV and Socialcam with Mike Seibel



In episode 16 of the 20 Minutes VC, host Harry Stebbings interviews Mike Siebel, a partner at Y Combinator and co-founder of Socialcam and Twitch TV. Siebel shares his tech journey, influenced by a family background in computing, and his pivot from political fundraising to tech entrepreneurship. He recounts joining Justin Kan and Emmett Shear on a cross-country trip that led to co-founding Justin TV, which evolved into Twitch TV, and eventually his role at Y Combinator. Siebel discusses Y Combinator's approach to fostering successful startups, emphasizing the importance of founder-driven growth, a supportive alumni network, and the pivotal Demo Day for fundraising. He outlines YC's selection process, focusing on strong, technically talented teams with equitable equity splits, working full-time on large market opportunities, and displaying rapid progress and unique insights. Siebel also touches on his work in diversity and outreach at YC and offers advice for aspiring entrepreneurs, stressing the significance of starting early and building a skilled founding team over having a polished idea.

Summary Notes

Introduction to Accelerator Week on 20 Minutes VC

  • The podcast episode is part of Accelerator Week, featuring interviews with top accelerators.
  • Y Combinator is highlighted as a world-famous startup accelerator.
  • Y Combinator assists early-stage startups with launching, growth, and seed capital.
  • Notable Y Combinator alumni include Dropbox, Scribd, and Reddit.

"Today is the turn of the world famous Y Combinator, a startup accelerator in Mountain View, California. It helps early stage startups launch, grow and raise seed capital for their business."

This quote introduces Y Combinator and its role in supporting startups, setting the stage for the podcast's focus on accelerators.

Mike Siebel's Background

  • Mike Siebel has had a significant career in technology and VC.
  • Co-founder and CEO of Social Cam, sold to Autodesk for $60 million.
  • Co-founder and CEO of Twitch TV, acquired by Amazon for $970 million.
  • Mike's dual experience as a founder and a VC provides a unique perspective on the accelerator business.

"Mike Siebel, who is a partner at Y Combinator. But before Y Combinator, Mike had an incredible career in the technology industry, being the co-founder and CEO of Social Cam, which was acquired for 60 million by Autodesk in 2012. If that wasn't enough, he was also the co-founder and CEO of Twitch TV, which was sold for $970,000,000 to Amazon in 2014."

This quote summarizes Mike Siebel's notable achievements and transitions in his career, emphasizing his expertise.

Mike Siebel's Entry into Technology

  • Mike was exposed to technology from a young age due to his family.
  • Received his first computer in 6th grade.
  • Regrets not pursuing computer science or programming during school.
  • Believes that including CS in school curricula would benefit education.

"So growing up, my dad was a programmer and my grandpa was very into computers. He was a professor. And so basically I was just always around computers, I was always around tech."

Mike attributes his comfort with technology to his family's influence, which laid the foundation for his career.

Decision Not to Pursue Programming

  • Focused on excelling in school, which did not emphasize computer science.
  • Reflects on the lack of CS education in primary schooling with regret.

"I think that I was so focused on school and doing well in school. And because computer science and software engineering isn't one of the primary subjects taught at school, I just figured I would focus on those things that I had to focus on to get good grades at school, which I don't know, is sad."

Mike expresses his disappointment at not having pursued programming earlier due to the school curriculum's focus.

The Beginning of Justin TV

  • Met Justin Khan at Yale, who later proposed starting a company.
  • Initially thought Justin's idea for an online reality TV show was terrible.
  • Joined Justin and Emmett Shearer on a cross-country trip to set up the company.
  • Despite initial skepticism, decided to join Justin TV after contemplating the rarity of such an opportunity.

"And after school, about a year after school, Justin told me that he was going to start a company on the west coast in San Francisco. And he told me about it and it was this online reality tv show, okay. And I thought it was basically the worst idea ever."

Mike recounts his initial reaction to Justin Khan's company idea, which he later joined despite his initial reservations.

Joining Justin TV

  • Worked on a political campaign before joining Justin TV.
  • Realized that political opportunities would recur, unlike the chance to start a company.
  • Moved to San Francisco in 2006 to become a co-founder of Justin TV.

"And on the flight back to the east coast, the only thought that went through my mind was, when is the next time your great friend is going to ask you to start a company? This might be a once in a lifetime thing."

This quote captures Mike's decision-making process in joining Justin TV, emphasizing the uniqueness of the opportunity.

Transition to Y Combinator

  • Justin and Emmett joined Y Combinator's first class in 2005.
  • Justin TV was their second company and participated in YC's winter class of 2007.
  • Mike Siebel started working at Y Combinator several years later, in the winter of 2013.

"So actually, Justin and Emmett were in the first Y Combinator class, which was in the summer of 2005, and they ended up actually selling their company on eBay, which was pretty cool at the time. And Justin TV was their second company."

This quote explains the connection between Mike's partners and Y Combinator, leading to his eventual involvement with the accelerator.

Mike Siebel's Career and Transition to Y Combinator

  • Mike Siebel spun off a company called Socialcam from Justin TV.
  • After selling Socialcam, he was invited to be a part-time partner at Y Combinator (YC) while working at the acquiring company.
  • A year later, Sam Altman asked him to join YC as a full-time partner.

"So January 2013 after that point, I had basically spun a company out of Justin TV called Socialcam. I had sold Socialcam. Justin TV was starting to become Twitch TV video gaming site that Emmett was leading. And YC asked me to come back and be a part time partner while I was working at the company that bought Socialcam. And that was tons and tons of fun. And so about a year later, Sam asked me to join as a full time partner."

The quote explains Mike Siebel's transition from working on Socialcam and Justin TV to becoming a part-time and then a full-time partner at Y Combinator.

Y Combinator's Role in Company Success

  • Y Combinator's success is attributed to the founders it supports.
  • YC's support is categorized into three areas: advice from former founders, a strong alumni community, and Demo Day for fundraising.
  • Advice is practical and from experienced founders.
  • The alumni network is extensive and facilitates deals, customer acquisition, and advice.
  • Demo Day helps startups with fundraising by bringing investors and founders together.

"So I would say, first and foremost, the founders make these companies happen and we just kind of help out on the edges. I would say that what YC really does for companies, I think, can be easily divided into three categories. The first is that we'd like to give companies good advice, advice from the perspective of founders, oftentimes almost all of the time from former founders. The second thing is the alumni community, which is massive. Now, I think it's over 2000 people have gone through IC, and so there's just a wide range of people you can reach out to, whether it's to do a deal, whether they're potential customers, or whether you want to ask them for advice. And then I think the last thing is demo day. I think know it can't be ignored, that money is kind of the lifeblood of an early stage startup. You have to be able to work on full time, you have to be able to put resources to bear to make your company good. And I think that on demo day, we create a situation that's very advantageous to founders. We put all of the investors in one room, we allow all of the founders to pitch the investors at the same time. And as a result, it helps make fundraising go faster, it helps increase the amount of money you can raise and the valuation."

The quote outlines the three main ways Y Combinator supports startups: providing founder-centric advice, leveraging a vast alumni network, and facilitating fundraising through Demo Day.

Demographics of Demo Day Investors

  • Investors at Demo Day are a mix of angels and partners from top firms.

"It's a mix, primarily angels, but all of the best firms will send partners as well."

The quote clarifies that both angel investors and venture capital firms are present at YC's Demo Day, providing a diverse pool of potential investors for startups.

Y Combinator's Selection Process

  • YC has a three-phase application process for startups.
  • The initial phase filters out less promising applications.
  • Each application is reviewed and graded by at least three partners.
  • The top 450 applications are stack-ranked and offered interviews.
  • One in four companies interviewed are offered a spot in YC.

"We do. So many companies apply. Very many companies. And so there's basically a three phase process. The first phase is kind of a general review of the applications and that basically sorts the applications into ones that we should be considering and ones that we shouldn't really even consider. Then the second phase involves each partner, I'm sorry, involves each application being read and graded by at least three partners. And from that process we create a stack ranking of approximately 450 applications at the top. And then we take those 450 best ranked applications and we offer them all interviews. And the interviews are ten minutes long and they're done over the course of a week in Mountain View. And then of those interviews, approximately one in four companies will be offered a spot in YC."

The quote details the rigorous selection process Y Combinator uses to determine which startups to accept into their program, emphasizing the competitive nature and the structured evaluation.

Desired Qualities in Founders and Startups

  • YC looks for technically talented teams working full-time on their startup.
  • Preferable for teams to have known each other for a significant time and have an equal or near-equal equity split.
  • Large market potential is crucial regardless of the specific idea.
  • Traction is important, with YC accepting companies at various stages of development.

"There are four things that I like to see. One, I like to see strong, technically talented teams who are working on their company full time and who are splitting their equity equally or close to equally, and who've known each other for at least six months. But I like teams that have known each other for much longer. I like to see them going after large markets. I don't particularly care what the idea is, but I do care that either a lot of people have this problem or the people or companies that have these problems are willing to pay a lot of money for these solutions. So really big markets are important."

The quote specifies the attributes Y Combinator values in the teams and startups they choose to back, highlighting the importance of team dynamics, market size, and company progress.

Importance of Speed and Progress for Startups

  • Startups must demonstrate the ability to accomplish twelve months of work in six months.
  • Speed is considered a primary ally for startups.
  • Rapid progress is a critical factor that Y Combinator (YC) looks for in startups.

"We have to feel like you are pushing the envelope in terms of the amount of work and the amount of progress that you have, because basically speed is one of a startup's number one allies."

This quote emphasizes the importance of speed and efficiency in a startup's operations, highlighting that YC values companies that can move quickly and make significant progress in a short amount of time.

Value of Unique Insights in Interviews

  • Interviewees should provide unique insights or new perspectives on problems.
  • YC expects to learn something from the interviewee, indicating their expertise.
  • Credentials are less impressive than demonstrating speed and unique business insights.

"In an interview, we should learn something. You should be an expert in what you're doing in such a way that I feel like I've learned something at the end of those ten minutes."

This quote underlines the expectation that an interviewee should convey their deep understanding and unique perspective on their business, which should be enlightening to the YC partners.

Educational Background and Y Combinator

  • YC does not prioritize educational background when selecting startups.
  • Educational diversity is not a factor in YC's decision-making process.

"Yeah, we don't care at all. Absolutely don't care at all."

Mike Siebel clarifies that YC is indifferent to the educational background of startup founders, indicating that it has no bearing on their selection for YC placement.

Common Red Flags for Startups

  • Red flags often relate to team dynamics and structure.
  • Lack of a technical co-founder, unequal equity splits, part-time commitment, and reliance on outsourced engineering are concerns.
  • Outsourcing engineering is a significant red flag for YC.

"They usually center around team. They usually center around either the lack of a technical co-founder, a very unequal equity split, teams that aren't working full time, teams that are relying on outsourced engineering to build their product."

Mike Siebel identifies key red flags that YC looks for when evaluating startups, focusing on the composition and commitment of the startup team.

YC Investment Decisions

  • YC partners have individual autonomy in the decision-making process.
  • A single "yes" from a partner can secure a startup's entry into YC.

"One of the unique things about the YC interview process is that you only have to get one partner in the room to say yes to get in."

This quote explains the YC interview process, where the agreement of just one partner can result in a startup being accepted into the program.

Startup Preparation for Y Combinator

  • Startups should focus on strong execution and rapid movement towards a minimum viable product (MVP).
  • Engaging with customers and iterating on the product is crucial.
  • YC looks for qualities that inherently make a company strong.

"And so what you should be doing is executing on your company. Assuming you have a strong team, you should be moving as quickly as possible to an MVP and talking to customers as much as possible and iterating."

Mike Siebel advises startups to concentrate on developing their company and product, emphasizing the importance of customer engagement and iteration as part of the natural growth process.

  • Mike Siebel does not focus on predicting market trends.
  • Strong teams and big markets are more important than current trends.

"I neither know nor care. I don't believe in my predictive powers at all."

Mike Siebel expresses a lack of interest in attempting to predict which market sectors will be successful, suggesting that strong teams in substantial markets are what truly matter.

Day in the Life of a YC Partner

  • YC partners split their time between standard YC duties and other initiatives.
  • Partners have the flexibility to choose projects that improve YC.
  • Mike Siebel spends his time advising companies and working on diversity and outreach.

"50% of your time is spent doing the normal YC partner things... And the other 50% of your time, basically partners get to choose what they want to do to help YC be better."

Mike Siebel describes the balance of responsibilities for a YC partner, highlighting the combination of routine duties and self-selected projects aimed at enhancing YC's impact.

Role at Y Combinator (YC)

  • Mike Siebel spends his time talking to companies interested in YC and organizations that want to work with YC.
  • The goal is to help increase the number of people starting tech companies.
  • He guides companies early on towards success, whether or not they join YC.

"of my time talking to companies that are interested in YC or organizations that want to work with YC to help increase the number of people starting tech companies."

This quote explains Mike's role in engaging with companies and organizations to foster the growth of tech startups, highlighting the broader mission of YC to nurture the tech ecosystem.

Advice for Entrepreneurs

  • Start early and learn on the job rather than in a classroom or a larger company.
  • Practical experience at a startup provides faster learning than traditional employment.

"So what I would say is start early. Don't assume that you're going to be able to learn these skills in a classroom or in a larger company. If you want to do a startup, start now. You're going to learn much faster on the job than you will learn at another job."

Mike emphasizes the importance of gaining hands-on experience in the startup world as early as possible, as it accelerates learning and skill development beyond formal education or corporate settings.

Building a Technology Startup

  • Outsourcing is not recommended for building a large, impactful company.
  • Forming a skilled founding team is crucial, including at least one good engineer.
  • It's better to start with a team and then narrow down the idea, as opposed to starting with an idea alone.

"I think if you want to do a technology startup, step one is to go through all of your friends and all the people you've worked with and build your team."

Mike advises that the initial step for creating a tech startup is to assemble a capable team from personal and professional networks, suggesting that team composition is a critical foundation for startup success.

Hardest Career Decision

  • Deciding between starting another company or joining Y Combinator as a partner was challenging.
  • Factors influencing his decision included lifestyle changes, family considerations, and the desire to support others after personal startup successes.

"Would say, whether to start another company or join YC as in a partner."

Mike shares that choosing his next career move was difficult, highlighting the complexity of such decisions for entrepreneurs.

Investment Philosophy

  • Personal use and love for a product are significant indicators for potential investment.
  • Reflects on missing the opportunity to invest in Dropbox, which he used daily from its inception.

"So that's certainly one of the things that I think know when I decide to invest."

Mike conveys that his investment decisions are heavily influenced by his direct, positive experiences with a product, suggesting that user satisfaction is a strong signal for investment potential.

Show Closure and Invitation for Reviews

  • The host, Speaker A, thanks Mike for the interview and expresses a desire to have him on the show again.
  • The host invites listeners to leave iTunes reviews and participate in a competition to win a meeting with a venture capitalist.

"Well, Mike, thank you so much for coming on the show. I've hugely enjoyed chatting with you and I hope to have you on again soon."

Speaker A closes the interview by showing appreciation for the conversation with Mike and looks forward to future engagements, while also encouraging listener interaction and feedback through iTunes reviews.

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