Sep 20, 2019 · 24m · y-combinator
Jared Friedman - Advice for Hard-tech and Biotech Founders · Y Combinator
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this Y Combinator Startup School lecture, Partner Jared Friedman presents practical strategies for hard-tech and biotech founders to navigate technical risk, validate market demand, and execute milestone-based fundraising. He demonstrates how ambitious visions, creative MVP hacks, and Letters of Intent allow early-stage hard-tech startups to overcome capital constraints and scale successfully.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The partners hold 93% of the talking time here. How this is scored →
The partners as informed peer 1.2 Guest teaching 0.2 Guest disagreement 0.2 The partners pushing back 0.2
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:55 Questioning the feasibility of LOIs
An audience member presses on the practical paradox of asking companies to sign non-binding contracts for unbuilt products.
Hardest push from the partners ▶ 19:25 Reframing difficulty as market validationJared reframes the premise that difficult LOIs are problematic, explaining that their friction is precisely what makes them valuable proof.
Biggest teaching moment ▶ 17:27 Audience member notes omission of AIAn audience member points out that none of the seven presentation examples covered AI, prompting Jared to concede the oversight.
The partners hold their own ▶ 22:14 Navigating enterprise stakeholders with LOIsJared illustrates deep domain expertise by explaining how the LOI process surfaces organizational decision-makers and dry-runs enterprise sales.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| Lecture Outline | 0 | 0 | 0 | 0 | Solo lecture monologue setting up definitions of hard-tech companies and contrasting technical risk with market risk. | |
| YC's Hard-Tech Record and Advice Applicability | 0 | 0 | 0 | 0 | Solo lecture monologue walking through seven case studies of YC portfolio companies solving the heavy MVP problem. | |
| Problem 2: Proving Customer Demand (Pre-Sales & Letters of Intent) | 0 | 0 | 0 | 0 | Solo lecture monologue explaining pre-sales strategies and structuring Letters of Intent (LOIs). | |
| Strategic Fundraising for Hard-Tech (The Step-by-Step Milestone Model) | 0 | 0 | 0 | 0 | Solo lecture monologue detailing the step-by-step milestone fundraising ladder for hard-tech founders. | |
| Audience Q&A: AI, Non-Profits, LOIs, and Team Building | 6 | 1 | 1 | 1 | Interactive Q&A where audience members ask practical questions about AI, non-profits, and LOIs, and the host provides authoritative answers drawn from YC founder data. |
Statements from this episode (13)
Over 1,000 YC Startup School companies are in hard tech or biotech
“Across all of startup school, there are actually over a thousand companies that are doing hard tech or biotech things”
Friedman: Hard-tech companies face high capital needs and feasibility uncertainty
“So the way I see it is a hard tech company is a company that fulfills two criteria. One, it will take a lot of time and money to build your first product. And two, even if you had lots of time and money, it's not clear if it would be possible to build it at al…”
Friedman: Software startups face market risk; hard tech faces technical feasibility risk
“So if your company is building a normal website or a mobile app, you probably have mostly market risk, which is to say you have a new idea. It's not totally clear if people are going to want this thing that you're making, but you probably don't have much techn…”
Hard-tech startups find recruiting and fundraising easier than standard software startups
“While launching the product is easy, turning the product into a really big company is actually really hard. Whereas with Boom, it's exactly the opposite. Building a supersonic jet is, like, incredibly hard, but everything else around it is really easy.”
YC is the world's largest bio and hard-tech seed investor
“YC is actually the largest bio seed investor in the world and the largest hard tech seed investor in the world. This includes accelerators, seed funds, every kind of investor.”
Hard-tech YC applicants have a 10x higher acceptance rate than others
“Hard tech companies that apply to YC actually have about a 10 x higher acceptance rate than other kinds of applications.”
Astranis built its first test telecommunications satellite for under $50,000
“It turns out actually that the cheapest telecommunication satellite that is useful costs like at least ten million dollars to build and launch. And so Astronus' hack was to start with a test satellite. The satellite in this photo was their first satellite. The…”
Friedman: Hard-tech startups can raise capital by preselling before building
“So basically they sold it before they made it, and this is a very generalizable technique that a lot of hard tech companies use in one form or another.”
Jetpack Aviation pre-sold flying motorcycles online to prove customer demand
“A good example of this is a company called Jetpack Aviation from two batches ago, which is building the flying motorcycle in the picture. And what Jetpack Aviation did was they ran a pre-sale campaign, and they basically sold flying motorcycles to a bunch of p…”
It is illegal to conduct pre-sales for FDA-regulated medical products
“For example, if you're doing something medical that requires FDA approval, it's actually illegal to do pre-sales, so don't do that.”
Non-binding LOIs effectively filter casual interest from serious customer demand
“Because it's not binding, it doesn't actually commit the customer to buying, but because it looks like a contract, customers take it really seriously. It's easy when you're talking to a customer for them to, like, be polite and casually say, like, sure, I'd bu…”
Friedman: Top hard-tech founders minimize step sizes between funding rounds
“Really good hard tech founders are maniacal about, like, pushing down the size of each of those steps so that each step is as small as possible, which makes it as easy as possible for them to achieve the milestones that they need to raise the next round of fun…”
Kyle Vogt built the original Cruise self-driving MVP in three months
“The original Cruise car Was built in less than three months during YC. Kyle basically just, like, was in a garage building this car and writing code for, like, three months solid, and by the end of YC he had an MVP that he could use to drive on the highway to …”