What it was like going through YC W24

The YC S24 application deadline is right around the corner. We wanted to reflect on Blacksmith’s journey through the W24 batch. Buckle up, this is going to be a long read.

Pre-YC

We meandered through a number of ideas for about 9 months before getting into YC. We would typically do a bunch of legwork on an idea before either losing conviction, realizing it wasn’t a good fit for our skill sets, or admitting that it was simply a bad idea.

One evening, we were getting dinner and complaining about the state of CI at our respective jobs, as engineers do. We realized that we had all dealt with very similar pain points, despite being at companies in very different stages and segments of the market. We walked away from this conversation feeling like the CI compute space (which is a big chunk of the cloud compute market) was underserved by the traditional clouds. Over the next few weeks, as we did more research, our conviction in the space continued to grow. In late November, we started playing around with some of the ideas that have now come to underpin Blacksmith.

As we were doom-scrolling Twitter in early December, we came across this tweet from Dalton.

At this point, we’d spent enough time on Blacksmith to know that we wanted to work on this full time. However, we felt that we were way too early, and were honestly a little scared about actually taking the leap to do our own thing. We rationalized that we were going to build Blacksmith sooner or later anyway, and getting into YC would just accelerate that timeline. Looking back, we are very glad we followed our gut and applied.

Fast forward to two weeks later, we were in! When Jared Friedman offered us a spot, we accepted immediately.

Moving to SF for YC

We spent the rest of December figuring out the logistics of moving our lives to SF for the duration of the YC batch.

The two big rocks were:

1. Finding a place in SF: YC recommended several furnished apartments, but since we were late, none of their suggestions were available. We ended up finding an Airbnb in Bernal Heights (with a *very* nice coffee shop in the neighborhood).

2. Pets: We’re a very pro pet company with four pets in total - three cats and a dog. Moving them to SF was not an option, so we had to figure out alternate arrangements to make it work.

What YC has to offer

Money

YC invests $500k into your startup, where $125k is for 7%, and the remaining $375k is on an “uncapped MFN SAFE” (i.e. at the next financing round’s valuation). YC wires you the $500k upfront. This is very founder-friendly and is enough to give most founding teams almost 2 years of runway.

Cohort

YC splits everyone into four groups. Each group has 50-60 companies headed by two group partners and two visiting partners. The groups are further split into sections of 10 companies based on the product area. We were in the “dev tools” section and met every two weeks for group office hours. By the end of the batch, we had formed a pretty strong bond with the folks in our section.

Office hours

Every company in the batch has group office hours with their section, and 1:1 office hours with their respective YC partners. Group office hours were thematic and involved sharing updates about our progress as a group. We’d also use this time to bounce ideas off of people and share things we were struggling with.

One of our favourite parts of YC was the opportunity for 1:1 office hours with our group partners, Jared and Nate. They gave us honest feedback about what we could be doing better, especially around pipeline generation and growth. Since Nate had previously built Lever, he had a lot of expertise in enterprise sales, which was invaluable for us as a company trying to sell a piece of infra to other tech companies.

These office hours also added implicit pressure to make consistent, measurable progress on some dimension every two weeks. No one wanted to show up to their next office hours without new updates to share.

Bookface

People in YC also get access to Bookface, their internal social network. Think of it like a StackOverflow for startups. As a first-time founder, Bookface is an absolute godsend. In addition to the community, it gives you life-long access to a knowledge base of articles covering topics like incorporation, fundraising, hiring, and generally most things you are bound to run into when setting up your company.

Peer pressure (the good kind)

YC brings with it a sense of urgency and intensity to get a lot done in 3 months. This had a few implications. It meant:

1. If you have conviction in an idea, build it quickly, talk to users, and try to grow it

2. If you’re going to pivot, pivot quickly

Many companies, including us, didn’t have a fully-built product before the batch, yet had a working product with several customers by the end. We also know folks who pivoted multiple times, but finally landed with something they deeply believed in.

Customers

If you’re in YC and are building something for startups, it’s a fantastic place to get early customers. You have unrestricted access to 200 companies, each with $500k in funding. Some of the most successful YC companies like Deel, Pulley, and Brex got their start this way, and continue to get steady inbound from each YC batch.

Even though early stage startups weren’t necessarily our ICP, many of our batch-mates were willing to try Blacksmith out to give us mileage and early feedback. This was invaluable.

Our YC launch

Every company in a YC batch has at least two launches: a “Launch Bookface” and a “Launch YC”. Launch YC is when YC makes a dedicated post about your company from its official LinkedIn and Twitter accounts. Your group partners will push you to do these launches, as soon as possible, and often way before you’re comfortable putting your product out there.

This is a big opportunity to get early users for most companies, since YC has millions of followers across their social media accounts. We wanted to time our Launch YC to be about a week before we were going to start our fundraising conversations with investors. We had a fairly successful launch and got a number of early customers (total strangers!) signing up and running their CI on us.

Our launch also brought some fortuitous second-order effects. A random developer, with a large twitter following, happened to discover Blacksmith and tweeted about us.

Greg’s tweet went semi-viral, and we received a sizeable inbound response, leading to some more customers. All this gave us a good deal of growth and traction going into fundraising.

Fundraising

The YC machine is built around helping companies raise a seed round towards the end of the batch. We would summarize the benefits as:

1. Tailored advice for fundraising

2. A ton of inbound interest from VCs and angels

3. A large angel network of ex-YC founders

4. Expedited fundraising windows of 2-4 weeks

5. Raising at a higher cap

We took about 70 calls in the 2 weeks we spent fundraising. We decided to first front-load angel calls from friends & family and YC alumni, to give us some momentum before we started talking to bigger institutional funds. Our initial calls were very successful — the angels we spoke to were relatively high conviction and a quick 30 min chat would often lead to a $50k check.

After this initial bout of success, things started to get rough — we were really struggling to calibrate our pitch to the various kinds of institutional funds we were speaking to. We realized a key difference between angels and institutional funds: angels are usually investing on “vibes”, whereas bigger VCs often have an “investment thesis”, create “market maps”, and then categorize your company into a bucket within a market. Our pitch was generally not congruent with this thought process, and so a lot of investors found it hard to think about us within their framework.

Over time, we got better at calibrating our pitch to the investors we were talking to, and started seeing some success. By the end of the second week, we had our first lead investment offer! The moment we let firms know that we had a lead investment offer, our conversion rate with them went from near-zero to over 80%. Once we were closer to making a decision, YC was again incredibly helpful. Jared went out of his way, even over the weekend, to get on the phone with us and help us negotiate.

Just apply

Once in a while, there’s discourse online, particularly on Twitter, on whether or not to apply to YC. If you’re a first-time founder, we would say it’s a no-brainer. We strongly believe it gives you an unfair advantage when building your company. YC helps you avoid falling into traps like hiring and scaling too early before PMF. Ultimately, they stay true to their word about constantly pushing you to make something people want.