The Wisdom Wall

“especially as we're reviewing YC applications, if you look at a demo and that demo, uh, does not have a base level of quality design, it seems like the person just didn't even try because it's so easy to do it now.”

“you should not use ads as your primary business model unless you expect to be a top 10 site on the internet. Otherwise, it's too hard to monetize and build a huge scale to become a massive company.”

“If your business is built on top of another big successful platform, and your business starts to work, then it's actually in the interest of that platform To shut you down and capture all of that revenue for themselves. So that's why even if these look like they're working in the early days, they can be turned off at…”

“And for any, anybody else in the audience, like, you lose a little bit of credibility, I think, you know, when your customers are viewing your product and they're saying like, Eh, this looks like a bunch of other things I've seen. They probably just use AI to build this and design it. If that's the case, like how good…”

“even the little bits of motion here is the kind of thing that like AI will just give you that for free and you're like, yeah, okay, let's go with that. But you would never create yourself.”

“it's very easy using the same tools that everybody else is using to end up in the same place. You have to be intentional about ending up in a different place. And so, um, rather than start from What does the AI spit out? And then let's tweak that. I would start from, you know, what color palette do we want to use? And…”

“What most people do is they come down and they're going to read the headlines. They're going to say, okay, what our customers say, compliance, investors, choose your plan. Like you got to be explicit and assume people are not going to read the subheadline. They're only going to read the subheadline if they're intrigued…”

“I think one of the tricky things is it seems like part of the product here is code and logs, which have a lot of text in them. And when you try to show that in screenshots, it competes with the actual text that you're trying to communicate what's happening.”

“I think a great way to figure out what should be your headline is to just ask your users, like, how would you describe our product? Because chances are the way your users think about your product and would describe it is the way that other users potentially would too.”

“And you should plan to start this writing these emails manually and personalized, doing it yourself, not starting with automation. You have to do it manually first so that you can learn and figure out what works so that you can then start to scale the process more.”

“But one thing that's important to note is that conversion rates will decrease as you scale. So if you're starting out in the early days and you're writing these emails manually and you're not getting good conversion rates, then that's something you should fix before you start to scale because they're only going to get…”

“I found that the ideal channels to contact are email is usually better. LinkedIn is usually worse.”

“you want to try to find the uncommon commonalities with the people that you're reaching out to. Now, uncommon commonalities are things that you have uniquely in common with somebody else. Things that are not obvious to have in common with other people... You have to put in the work to research the company, find the…”

“the language that your users use to describe you is almost certainly the same language that's going to resonate with other people just like them.”

“You don't need to tell somebody, um, how you found their contact information. That's relevant to you, not relevant to them.”

“You, the founder, should be sending these. People are going to take them way more seriously when it comes from the founders or the CEO Much more so than if it comes from some account executive or some intern or some other automated process that you set up here.”

“what middle manager is going to give out their personal cell phone number when trying to win a customer's business? Like nobody's going to. And so if you make people feel like you care about them and you're going to stop at nothing and your personal career depends on making them successful, People are going to want to…”

“there are actually only a handful of business models that are responsible for nearly all billion dollar companies. And rather than trying to reinvent the wheel, you should actually just copy one of these.”

“Nearly every billion dollar company is one of these nine business models.”

“However, for your purposes, as an early stage startup, you should just have a single business model that you're focused on.”

“The interesting takeaway here is that marketplaces are most likely to build winner-take-all companies. They tend to become so big and dominant in their industry that it doesn't leave much room or market share for other competitors once marketplaces actually get huge.”

“For transactional businesses, because they're so close to the transaction, They often become critical infrastructure for other companies that they build on top of. And that usually means that they are solving a top three problem for them.”

“consulting businesses suffer from having non-recurring revenue, scaling with people rather than software, and having very low margins as a result. So that's why these businesses are not venture scale.”

“Similarly, affiliate businesses, they tend to be too far away from the transaction. That means that you have to acquire a customer, send them off to another product or service, hope that they actually make a transaction on that other product, or you will get some small commission from that, 30 to 90 days later. So it's…”

“We also see that recurring revenue consistently creates winners. And this is because it is highly predictable. Once a customer has committed to pay, they're going to continue paying until they explicitly say that they want to stop paying. They also have higher customer lifetime values. Versus one-off transactions. And…”

“So just that five percent difference in monthly retention can actually be the difference between life and death for a startup.”

“In the example of companies like DoorDash and Instacart, they've reached economies of scale where they're so large now that they've been able to drive their costs further down at this scale And improve their margins, which new entrants are not going to be able to compete with.”

“If you are able to get users for free because other users of your product tell new users to come join, and you're competing with a company that has to pay to acquire their customers, Then you are going to grow much faster and capture way more of the market.”

“The next insight is that you should price on value, not on cost.”

“Another way to find your value is to keep incrementally raising prices until you get pushback from users. And when you keep incrementally raising your prices, you will ultimately find the ideal price, which is when customers complain, but they still pay.”

“On the other side, if you were to actually charge a lower price and they say, yeah, that sounds great, and accept immediately, Well, that probably means that you're pricing too low and you're leaving a lot of money on the table.”

“lower prices are not a sustainable advantage. Sometimes we talk to founders and they say, well, our product is just like our large competitor, except ours is cheaper. And that actually does not sound like a good idea. That's not a way to build a winner. All that means is that your large competitor can underprice you…”

“It also turns out that when you charge more, you get higher margins and you're able to build a bigger moat. This means if you have higher margins than your competitors, you can pay more to acquire a customer, which means you can acquire all of the customers before they do.”

“raising prices is actually the easiest way to grow revenue. If you have a thousand customers and you want to double your revenue, well, it sounds pretty difficult to spend all the time, energy, and money to go get a thousand more customers. However, if you're able to just double your price, just changing a number on…”

“There's a third option too, which is you could give a lower price in exchange for one of four key things. One, you could give a lower price in exchange for your first user. If you're just looking for initial feedback and getting somebody on the platform, totally reasonable to give a lower price for that. Or, if you're…”

“And as long as you build in enough value into your product to cover that price increase, you shouldn't see much churn. Most people will probably be willing to pay it if you have a sticky product.”

“The low price was signaling to their customers that maybe their product wasn't valuable, or it couldn't be trusted in the long term.”

“A lot of times when people hit a site, you know, they're asking themselves the question, what is this? Is it for me? Does it work? Is it credible? And I have to work pretty hard to figure out the answers to those questions.”

“Yeah, it's so interesting, like, you're not designing in a vacuum of your page, you're designing in the context of what users are used to, and if users are used to ignoring cookie banners and things like that that tend to pop up at the bottom, then, like, maybe they're just ignoring your thing there, too.”

“That's a great point because the latency is the interface in some ways in that how fast it responds to you, the longer it takes, the less it feels like a natural conversation and the more it feels like you're talking to a robot. The whole point is to make it seem like you're talking to a human.”

“This is the most effective way to get people to respond to emails that you're sending to them. And you're going to have a conversion rate two to three times what you would get if you were just sending a regular cold email.”

“when you're designing your page, The headlines are the things that are really going to stand out to people. So we hit this, we read this headline, we read the sub headline because it's up at the top, and then we spent a lot of time here just because we were trying to decipher what was going on, but I think if we were…”

“when you're just getting started, the important thing is to just find the right order of magnitude for your pricing.”

“pricing isn't permanent. This is really important. It often takes years to iterate and capture the full value of the product that you've built from your customers.”

“It's not purple gradients are bad. Nobody should ever use them. It's that now they're just so ubiquitous everywhere that they kind of, uh, lose all meaning and specialness and originality.”

“Anytime you have animations and you have things that are moving on the page, that always draws, uh, the viewer's eye. And so it's a good idea to use that when you're trying to highlight something that you want to make sure that somebody pays attention to first. But if you're doing it for something that's not the main…”

“It's important to think of pricing as a tool to help you learn faster. It can help teach you who wants your product. How much they want it? How much value your product provides to your users? And which channels you can afford to use to acquire your customers?”