Why did ClearTax join Y Combinator?

2014-06-03 19.42.42We get asked this question a lot. Our startup, ClearTax helps Indians e-File their Tax Returns online via our website www.cleartax.in (most of our user base e-Files using our easy-to-use software without any human assistance). As a company very narrowly focused on the Indian market, there is a lot of surprise when people hear:

  1. Y Combinator accepted our application.
  2. We derived a LOT of value from being in Y Combinator.

Note that, even our team was initially hesitant to apply to Y Combinator (YC). Fortunately, we did apply and even more fortunately, YC accepted our application. Now I am writing to all startup founders around the world and India who are considering applying to YC but are on the fence. Questions in your mind range from whether you will get in and more importantly how much value you will get out of upending your life and moving to the San Francisco Bay Area for a few months for YC.

TL;DR: Apply to YC. This will be some the best use of your time this week. (it takes five or six hours of serious effort.)

I’ll first address how ClearTax derived value from being part of YC. We continue to be part of the YC alumni network which is also hugely valuable.

The YC expertise still applies to you

If you are focused on a specific geography like India, you wonder whether YC will help your startup. You’ll be in a different timezone and a different geography. The answer is yes. Moving briefly to California is fine especially if you have co-founders.

We run an Internet software company. YC has deep expertise in software companies. So for many classes of questions, the YC partners can either give you an answer or connect you with a YC company which has solved something similar (or the YC alums can give you an answer). If the YC network doesn’t have an answer, and if turns out that you are the vanguard on a topic, then that’s a good thing in startups. This may be your competitive advantage!

What we learned at YC

Beginner’s mind

ClearTax is in the third year of its operations. We know a lot about the Indian taxes but almost nothing about a lot of things. When we came into YC, we didn’t know what to expect (most founders who start YC don’t know what to expect, that is the right place to start). YC is fresh eyes in every aspect of your business. The important part is to keep an open mind to everything the partners say. Being in YC led to extreme willingness to dig deeper on any aspect of ClearTax.

There are three aspects to the YC experience: The YC Partners, your YC batchmates and the YC alums.

The YC Partners:

“Make something people want” – the only thing YC partners want you to remember.

Paul Graham in it the first Tuesday dinner will tell you focus on your users and improving the product. That is really the only way to win. On the last dinner, he will repeat himself.

A lot of the initial help comes from the YC partners. Over Tuesday dinners and internal talks, they will talk about principles of growth and product.

Office Hours and Group office hours

YC makes you focus on your weekly growth. We had regular office hours with Geoff, Aaron and Kirsty. The office hours offer a regular rhythm of checking in your progress. There is complete intellectual honesty around usage metrics. You focus on only one thing every day, every hour. It becomes the top idea of your head if it isn’t already. Every week we pushed harder than the previous week. There was never a moment where you are off the hook.

Specific Examples

These examples are not exhaustive, these just sprang to my mind when I sat down to write this post. We listened carefully to the partners and typically put a lot of things in motion based on their recommendations.

Justin Kan and Dalton Caldwell ran a workshop on growth which continues to have a positive impact on us.

Kat Manalac is a genius in outreach and managing press relations. We were covered in the front page of The Economic Times of India when we announced we were in YC. We appeared with Alexis Ohanian on CNBC India.

Adora Cheung and Dalton gave us a fantastic idea on distribution which drove a lot of growth for us!

Kevin Hale did a lot of things for us. In the very first office hours with us, he asked us to look at every single page/button on our website and focus on conversions, bounce rates and drop offs. This really focused us and has made us data driven. Kevin is the an expert on form design and we benefitted a lot from that as ClearTax has a lot of forms. Kevin also put us in touch with an outside expert when we needed it.

Trevor Blackwell gave us ideas on how to fix performance issues which we ran into at scale.

Alexis Ohanian gave us help in putting together our messaging. He also helped with media and social media outreach.

All this taken together is a lot of compressed help in 12 weeks.

YC Batchmates

Our YC batch had 85 startups. You are surrounded by some of the smartest people every Tuesday dinner. They are very hard working and they are driven. Every week startups discuss their progress and you see software rapidly being produced. Teams shipped android and iPhone apps simultaneously in weeks. Startups ran experiments quickly and came back with results every week. I saw a team basically write code like crazy and make a metric ton of customer calls every waking minute. I saw a team go from zero presence in the bay area to 50(!) retail stores in the bay area in two months. Your startup sprints to keep up. Its a great time.

The batch mates teach you a lot.

A lot of them are programmers, so you can go ask questions about some bug you are running into. A team at YC helped us improve our analytics and measurement infrastructure for tracking signups and conversions over a Tuesday dinner.

The batch mates also become your friends. Running a startup is stressful. The batch mates help make the journey fun.

YC Alumni

The alums help a lot. From the YC initial interview process to everything that is happening with ClearTax today. We are grateful to every alum who has or is helping us! I can’t disclose a lot of names and specific help we got. Lets just say it was a lot and it was trajectory changing.

Calibrating Ambition

Being in YC makes you more ambitious. Most startups fail. All of your energy and life is invested in the startup you are running. You are better off being more ambitious than less. More ambitious startups have an easier time recruiting, fund raising and having people participate and believe in their mission. You are surrounded by some of the most ambitious founders on the planet. You start to aim for more impact.

Note that for your application, you do not need something which looks very big. It is actually good if you are starting something narrow and toy like. Quoting Sam Altman, President of YC: “Remember that the idea will expand, and become more ambitious as you go.”

ClearTax at Y Combinator

Not Everything is easy

As an international team, certain things don’t come easy. Our team was spread across New Delhi and the SF Bay Area during YC. We didn’t spend all of our time in Mountain View (so we missed a few dinners). Srivatsan spent a lot of time in Delhi. He ran the enterprise sales team and the operations team until more help showed up. Ankit did two round trips, I did two. The difficult part is being remote and being in different time zones.

There is an upside in being away: In India there is a lot of time sucked into matters day to day. Being in YC, and being there for a specific purpose focused us a lot. That has increased our overall level of focus even when we are back now in Delhi.

Being away from customer calls sucks, we couldn’t find an easy way to route calls from India to the US, we just became more disciplined in noting down customer calls for a remote team after a while (we still haven’t found an affordable solution!). Business development calls were interesting, some people would pay more attention when they would receive a call from a US number!

How to Apply?

Required reading before you apply: Paul Graham’s essay on how to apply

The YC partners read through thousands of applications every application cycle. It is your job to write a high quality application.

Quoting Paul Graham: “you have to be exceptionally clear and concise“.

Write the most straightforward description to every question without worrying about sounding “impressive”.

Also note what Sam Altman, president of YC has to say: “You also don’t need to have a pre-existing relationship with us (YC).  A lot of founders seem to think they need to figure out a way to meet with us or talk to us outside of the application process because VCs traditionally don’t fund companies they meet without an introduction.  This is part of our model; we’re willing to do the work to look at thousands of companies that come to us without an introduction.  In fact, we love doing so—many (perhaps most) of the best companies get started by unknowns.”

Specific advice for International founders:

One of the hard things about being an International applicant is that while writing the application,

you have to write for an audience which is not from your own country.

This is important. I have reviewed a few applications from Indian founders and I discovered they wrote with implicit local context which an international reader will not relate to. These apply more to the questions around impressive things the team has done, hacking systems, revenues (quote USD and not your local currency). You can try showing your application to an American friend and ask if they were able to follow along. In general YC looks for founders who are concise, explain things with great clarity. (These skills are learned over time with practice, so don’t worry if you are not good at it today). Just put in the effort.

Also make the video. Just talk into it as you would talk to a friend. Speak clearly.

In the part about what the company does, most applicants succeed in writing well: YC partners are deeply technical so you can write very specific things about your company and your software and they will understand!

Rejection

Getting into YC is statistically difficult. I have been rejected in the past. Don’t lose heart if you don’t get accepted. Just focus on making something people want and focus on your growth numbers. YC is also open sourcing itself via CS183B. Keep working on your startup and apply again.

We are always happy to help entrepreneurs as we were helped by a lot of YC alums along the way even before we got into YC. In the famous words of Paul Graham, Don’t Die.

Thanks to Kat Manalac, Ankit Solanki and Srivatsan Chari for reading drafts of this.

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