The social radar: Y Combinator’s secret weapon | Jessica Livingston (co-founder of YC, author)
28 Jun 2024 (3 months ago)
Jessica’s background
- Jessica Livingston is the co-founder of Y Combinator, the first and most famous startup accelerator.
- She is also the author of the bestselling book "Founders at Work" and hosts the "Social Radars" podcast.
- Jessica has a superpower of being able to read people incredibly well, which she developed over time.
- She got a perfect score on the "Reading the Mind in the Eyes" quiz, which tests one's ability to read people's emotions.
- Jessica's nickname in the early days of YC was "the social radar" because of her ability to read people well.
- This became a huge advantage when evaluating and investing in early-stage startups and founders.
- Jessica looks for signs of commitment, co-founder compatibility, and hustle in founders.
- She believes that founders need to be desperate and willing to "burn the boat" in order to succeed.
Thoughts on being under-recognized
- Jessica Livingston, co-founder of Y Combinator and author of a bestselling book on startups, feels she has often been overlooked and excluded from recognition for her contributions to YC's success.
- Despite being a co-founder, she is frequently omitted from news articles and even had attempts to remove her entry from Wikipedia.
- Livingston emphasizes that the opinions of those within YC, YC alumni, friends, family, and respected individuals in the Silicon Valley community matter more to her than external recognition.
- She acknowledges that her exclusion can be frustrating as it sometimes seems to fit certain narratives about YC that don't align with reality.
- In the early days of Y Combinator, Jessica Livingston played a crucial role in shaping the organization's culture and operations.
- She was responsible for developing the application process, conducting interviews, and selecting startups for funding.
- Livingston also contributed to the creation of YC's curriculum and provided mentorship to founders.
- Her efforts helped establish YC's reputation as a top startup accelerator and incubator.
Jessica’s superpower: the social radar
- Jessica Livingston, co-founder of Y Combinator, was known for her ability to assess founders' personalities and dynamics during interviews.
- She provided valuable input on founders' commitment, product knowledge, and motivations, influencing funding decisions.
- Livingston's observations sometimes raised concerns about founders' behavior or commitment, which she shared with her co-founders.
- Despite differing perspectives, Livingston and her co-founders usually agreed on funding decisions.
- Livingston emphasizes the importance of founder personality and culture fit when selecting startups for funding.
- She values founders who are passionate, knowledgeable, and pleasant to work with, prioritizing a positive and supportive community culture.
Evaluating founders: key traits and red flags
- Jessica Livingston, co-founder of Y Combinator, shared key qualities they look for in startup founders during the early stages.
- Potential red flags include significant gaps in equity allocation or unclear job commitment.
- During interviews, open-mindedness and a willingness to engage in spirited debates are positive indicators, while defensiveness is a negative sign.
- Domain expertise and strong co-founder relationships are important factors.
- Founders should avoid being "hackers in a cage," where one founder dominates the conversation or decision-making.
- Successful founders are open to learning from anyone, not just the most successful ones, and are willing to adapt their ideas based on feedback.
The Airbnb story: a lesson in hustle and determination
- Airbnb founders showed contagious energy and determination during their interview at Y Combinator.
- Despite initial skepticism about their idea of renting air beds, the founders' passion and resourcefulness impressed Jessica Livingston.
- Joe Gebbia brought cereal boxes re-branded as "Obama O's" and "Captain McCain's" to illustrate their commitment and creativity.
- The interview was intense, with Paul Graham calling the founders to inform them of their acceptance while they were driving and had poor reception.
- Joe initially hesitated to show the cereal boxes, but eventually revealed them, leading to further discussion and admiration for their efforts.
- After the meeting, Jessica Livingston strongly advocated for funding the Airbnb founders despite reservations about the idea itself.
- Jessica Livingston discusses the importance of social radar in evaluating founders during interviews at Y Combinator.
- Social radar refers to the ability to assess someone's character, potential, and drive based on subtle cues and interactions.
- Livingston emphasizes the value of intuition and gut feeling in making funding decisions, beyond just analyzing data and metrics.
- She highlights the example of Airbnb founders, who exuded confidence, determination, and a willingness to go the extra mile, despite their unconventional idea.
- Livingston stresses the significance of founders' passion, energy, and hustle in predicting the success of a startup.
A YC success story
- Jessica shares memorable interviews with YC founders who exhibited exceptional qualities.
- She highlights the importance of founders' passion, knowledge, and problem-solving approach.
- Parker Conrad's success with Zenefits despite its unsexy nature due to his expertise and determination.
- Jessica's support for Goat, a company that pivoted from a group dining concept to a successful sneaker company.
- Her belief in the founders' hustle and scrappiness led to Goat's eventual success.
The importance of earnestness
- Earnestness is one of the most important qualities in a successful startup founder.
- Earnestness means being humble, honest, and authentic.
- Founders should be passionate about the problem they're trying to solve and the users they're serving.
- Earnestness is key to success because it builds trust with investors, users, and employees.
- Hustlers: Founders who are able to get things done and make things happen.
- Domain expertise: Founders who have deep knowledge and experience in the problem they're trying to solve.
- Charisma: Founders who are able to inspire and motivate others.
Confidence vs. defensiveness
- Confidence is important, especially when fundraising.
- Founders should be able to admit when they don't know something and explain how they plan to address it.
- YC helps founders gain confidence by helping them create startups that are worth being a good bet.
Commitment and co-founder disputes
- Founders need to be committed to their startup and willing to burn the boat.
- Founders who are still getting a paycheck and health insurance are less likely to quit their job when things get tough.
- Co-founders need to get along and trust each other.
- YC spends a lot of time mediating co-founder disputes.
- It's risky when two founders get together just to start a startup without any history.
Relentless resourcefulness
- Jessica Livingston looks for founders who are relentlessly resourceful.
- She believes that every founder is different and she doesn't try to say that a person doesn't have a certain trait and therefore won't be funded.
- She asks founders about their previous projects to gauge their ability.
- YC's application asks founders about their previous projects.
- It's hard to tell if a founder is a good investment when you're the first investor.
Jessica’s social radar: origins and insights
- Jessica Livingston has always had a knack for noticing and understanding people's social dynamics and relationships.
- She spent a lot of time analyzing social situations with friends during her childhood and teenage years.
- She is naturally drawn to understanding people's motivations and behaviors.
- She has an aversion to phony people and can easily spot them.
- She believes her social radar skill is innate and not something she developed due to her upbringing or family influence.
- She gives an example of her curiosity about an edge case mentioned in the podcast's instructions regarding the quality of episodes.
Honing her social radar skills
- Jessica Livingston tries to reinforce her social radar skills by following up on her gut feelings about people she meets.
- She checks if people she disliked who were funded by Y Combinator failed, and if people she liked became successful.
- Her gut instincts are often negative, so she needs to know if people she rejected went on to be successful.
- She has never had a strong dislike for someone who went on to be a super success.
- The feeling comes naturally from within and cannot be honed.
- She observes people's behavior and doesn't listen to all their words.
Conviction and scams: a Y Combinator story
- Jessica Livingston has been tricked by people before.
- She shares the example of Ilia Lonstein of MixRank, who stole billions of dollars in Bitcoin and was convicted.
- She did not have any negative feelings or suspicions about him during their interactions.
- She acknowledges that there have been significant instances where they missed red flags during the 10-minute interviews.
The interview process: challenges and insights
- Y Combinator's interviews are 10 minutes long, which is enough time to make a decision in most cases.
- Longer interviews (20 minutes) were not necessary as they knew within the first 10 minutes.
- There have been cases where they accepted people who turned out to be unimpressive or incapable.
- They have also been tricked by people who seemed impressive during the interview but later proved to be posers.
- Sometimes they miss important details, such as co-founders not getting along, which can lead to problems during the program.
- Jessica acknowledges that some things are bound to slip through the cracks in the process.
Operationalizing founder evaluation
- Flags in the application automatically highlight certain things that need attention during the interview process.
- Examples of flags include crazy equity structures and founders not quitting their jobs.
- These flags serve as reminders for interviewers to pay attention to specific aspects during the interview.
Advice for building social radar skills
- Social radar skill is a significant advantage in early-stage investing and evaluating founders.
- YC's success can be attributed to the co-founders' deep technical backgrounds, which helped them choose good founders.
- To hone social radar skills:
- Pay attention to subtle cues and be aware of potential biases.
- Have a mental checklist of key observations to consider after conversations with founders.
- Ask questions that reveal important information, such as how long founders have known each other and if they've worked together before.
- Be conscious about asking questions that uncover key information relevant to investment decisions.
The “Reading the Mind in the Eyes” quiz
- Jessica took the "Reading the Mind in the Eyes" quiz and scored 36 out of 36.
- The quiz involves judging the emotions of people based on their eyes.
- Jessica found the quiz challenging, especially distinguishing between similar emotions like irritation and anger.
- She noticed that many people approached her at a YC event in London to discuss the quiz and their own scores.
- Jessica emphasizes the importance of understanding the meanings of the emotions described in the quiz.
- Jessica's approach was to look at the eyes and consider what the person might be trying to communicate.
- She found it helpful to think about what each emotion feels like when reading the corresponding word.
Jessica’s podcast: The Social Radars
- Jessica Livingston, co-founder of Y Combinator, launched a podcast called "The Social Radars" to have unscripted conversations with startup founders.
- The podcast aims to provide insights into the founders' triumphs and failures and help listeners understand the people behind the startups.
- Inspired by the podcast "Smartless," Livingston wanted to create a similar format for startup founders to share their stories authentically.
- Notable guests on the podcast include Paul Graham, Patrick and John Collison, Brian Armstrong, and Elad Gil.
- Livingston recommends starting conversations at YC events by identifying someone you find interesting, such as someone from Airbnb or Reddit, to engage in meaningful discussions.
Lessons from podcasting and interviewing
- Jessica Livingston, co-founder of Y Combinator and author, shares her insights gained from interviewing successful founders and entrepreneurs.
- She stresses the importance of keeping podcast conversations concise and interrupting guests when they digress.
- Building trust with guests is crucial, and she assures them of the opportunity to review their interviews before publication.
- Livingston highlights a memorable interview with Parker Conrad of Rippling, where he discussed the smear campaign and legal threats he faced after leaving Zenefits.
- She emphasizes the significance of correcting false information, especially when it negatively impacts individuals like Parker Conrad.
- Livingston discusses the rise of platforms that enable tech professionals to share their stories positively, promoting a more optimistic view of technology's impact.
- Subscriber count is a key metric for podcasters to track, indicating a loyal audience base.
- Listeners are encouraged to leave ratings and reviews to support podcasts they enjoy.
- Accurately gauging the success of podcast episodes based on gut instinct can be challenging, as perceived quality may not always align with audience reception.
Lightning round
- Jessica Livingston, co-founder of Y Combinator, recommends reading PG Woodhouse books, especially "Very Good Jeeves," "Right Ho Jeeves," and "Carry on Jeeves," as well as Keith Richards' autobiography, "Life," and Barbara Streisand's biography, "My Name is Barbara."
- Livingston's favorite recent TV show is "Clarkson's Farm," which follows Jeremy Clarkson's attempt at running a farm.
- Her life motto is to treat people the way she would like to be treated.
- The person who has most influenced her career is her husband, Paul Graham, from whom she has learned a great deal, especially his fearlessness in expressing his beliefs.
- Livingston has learned valuable lessons from the founders Y Combinator has funded, including Brian Chesky of Airbnb, who has become a mentor to her.
- She considers the early days of Y Combinator, when they operated without distractions and negative press, to be the most enjoyable and productive time of her life.
- Two moments when she felt Y Combinator was truly working were after the first summer of batch funding and when they invited founders like Sam Altman, Justin Kan, Alexis Ohanian, and Steve Huffman to participate in the Summer Founders Program.
- Y Combinator's batch investing approach originated from the success of the Reddit batch, which fostered camaraderie and facilitated connections with investors.
- The turning point for Y Combinator came when Reddit was acquired by Condé Nast in 2006, and a VC firm's seed program gained media attention for small investments, making Y Combinator feel legitimate and garnering attention from outsiders.
- The initial inexperience in angel investing led to the creation of the unique batch structure, where multiple startups were funded simultaneously to learn the ropes of investing.
- The batch approach proved to be advantageous, leading to the realization that there was something special about it.
- The Social Radar podcast is available on various platforms, including Apple, Spotify, and Amazon, as well as on the website socialradar.com. Listeners can support the podcast by spreading the word, writing reviews, and leaving ratings, as it relies on word-of-mouth rather than extensive marketing.