Why Y Combinator is a Startup University: Chat with PM turned Founder of YC backed Startup- Mercoa

YC is a university for Startups. If you are funded by VC, you have ticked at least the core part of the criteria of a winning startup.

What can we learn from Y combinator and instill some of the playbook in your work environment? No wonder Product Managers can learn a lot about how to build and distribute the product.

They challenge the status quo on Agile practices, Discovery vs Delivery dilemma & MVP.

I happened to speak to Sai - Product Manager Turned Founder of Mercoa - Accounts Payable SaaS platform for enterprises which is funded by YC.

Though it was 70 minute interview, I managed to summarise the core pieces in under 15 minutes which could be key takeaways, especially for growing startups.

Let us know your thoughts on the interview?

YC is a university for Startups. If you are funded by VC, you have ticked at least the core part of the criteria of a winning startup.

What can we learn from Y combinator and instill some of the playbook in your work environment? No wonder Product Managers can learn a lot about how to build and distribute the product.

They challenge the status quo on Agile practices, Discovery vs Delivery dilemma, and MVP.

I happened to speak to Sai Arora - Product Manager turned Founder of Mercoa - Accounts Payable SaaS platform for enterprises which is funded by YC.

Though it was 70 minute interview, I managed to summarise the core pieces in under 15 minutes which could be key takeaways, especially for growing startups.

At the end of the article, you will be able to understand how

• Sai & team picked a pain and launched the product.
• YC assesses startups for funding
• YC Way of Product Strategy
• Checklist on launching Products

Jay: Hey Sai, Could you introduce yourself and the product?

Sai: Mercoa is a B2B BillPay API. We help vertical SaaS companies launch revenue-generating API automation features for their customers. And so for myself, like I'm a former payment, payments product manager and former founder who's been kind of working on products for the last 10 years.

What was the insight that led you to build the product?

What inspired me to start Mercoa this time around was a problem I ran into when I was a PM at Bill.com . One of my first projects, when I joined, was to figure out how to embed bill pay or AP automation powered by Bill.com . Within this banking product, we launched Invoice Go.?

As I was kind of scoping that out, it turned into two major projects, one was sort of your typical PM project of what the look and feel look like for a small business user. What is that user experience? How will we get new customers and activate them? The second product was much more technical and much more of a technical PM role where I was looking at a monolith, all of the services that comprise that monolith, and then working with dozens of engineering teams to expose those services as microservices. So we can go ahead and ingest them and use them in this app.

So pretty painful product experience, I don't know anyone who's had to work in a monolith environment before, asking for specific services quickly turns into asking for a roadmap that's like a year long. We also had very large companies coming to Bill.com at the same time asking for a white label to pay API and we kept saying no to them. So I noticed there were sort of three major trends that told me there's an opportunity here.

Y Combinator is known for its rigorous selection process. Could you shed light on the key criteria or characteristics that Y Combinator looks for when assessing startups for funding?

My Co-founder and I have been interviewing with YC for 10 years. We've interviewed like five times. We've interviewed when we've had like product in the market, we've already been validating for assumptions, and then we've interviewed with nothing. And so from Mercoa, we interviewed with nothing.

I just had an idea and I had put together a rough validation plan, but purely assumption-based.

What YC is looking for three things

• Conviction & Clarity in Market & Idea
• Team
• Applicable background around the problem space.

What is your opportunity? How do you know it's an opportunity?

How are you going to get started?

And like, how do we know that you can execute? And so, the last piece is always a bit of like a hit or miss.

Like, If you can clearly and simply articulate your opportunity, like what is the opportunity?

Why does it exist? Why now? What's missing? What's your unique insight? That's half the battle right there.

I think it's like, that's the first thing because when you can simply explain something, that means you've truly understood it, meaning no buzzwords. This is how people have tried to solve it.

I think they're just looking for folks who have conviction and who know sort of the next path. Like because when you're going 0 to 1, you don't just go to 1 right away. It's like you go from 0 to 1 10th or 100th

Do the founders know each other well and do the founders compliment each other's skills?

Are you starting something in which you have experience or not?

In our case, my co-founder was at Stripe and he was at Google Cloud before, So he had API experience and payments experience so it just lent itself to the business, and I as PM took care of the product & and distribution side of things.

To add - YC also looks for Founder Market Fit.

In one of the video excerpts, Gary Tan quotes that a YC assessment interview exceeds not more than 10 minutes. How is it possible to validate an idea and assess it within 10 min?

It goes exactly like you said, it's 10 minutes. It goes by very fast. They always ask, what are you building? Who needs it? Why? And then from there, based on your responses, they'll go deep on the why. And I think this goes back to clarity of thought.

In our case, I think about our interview and all of the questions that they were asking, I kept bringing it back to the unique insight we had into our business

They do a thorough analysis post-interview on competition & market opportunity before shortlisting the seed round.

YC's motto is “ Make something people want “. What are the initial signals and metrics to know that you have built a product that people want during the Pre-PMF?

Yeah, so I think everyone's gonna have a different answer and that's just kind of based on your philosophy for your product. So for our team, the way that we build conviction around anything is that we build a demo where we ship it fast which could be a Happy Path demo where the product works exactly in the best-case scenario. Build it as quickly as possible make a video or show it live to people and then just step back right and if the audience you're showing it to is trying to pull it out of your hands immediately.

Great, You might have PMF, but? you now need to repeat that experiment five to ten more times and see if you get the same results

There are no Metrics other than that. I found that works. Because when somebody wants something, they will get it despite of anything, right? you can not follow up after a call. You could ignore them. They'll be on you anytime. We had a customer who reached out to me during Thanksgiving and I didn't think anything of it because we've been running an experiment on a self-serve playbook. We got a shared Slack channel with him. When I didn't respond there, he pinged me on LinkedIn. He's trying to get responses from us and pull information from us because they're trying to move this as quickly as possible. This showed us that we are building something people want isn't exactly what they want

Finding the initial ICP is crucial to achieve PMF

The other signal is the willingness to pay to avail the solution. Everyone has problems, but what determines the initial traction is the set of audiences who are ready to pay for your solution.

If someone is reaching into their pocketbook to pay you, that means that this is a problem that they're truly desperate for, and like, it's harder and harder to find desperate, but it's the most important. important signal because especially if you're starting, the only way you're going to survive is if you're able to help someone truly desperate

You are a Product Manager turned Founder.? What helped as a PM to transition to the roles and what do you need to unlearn and let go of some of the traits to move on as a founder?

I think the fundamental foundational difference that being a PM made me understand how I approached products and the importance of the problem space.

As a PM, the experiences I gained around focusing on problems pushing back against folks who were trying to rush me, and going deep on the problem is the most valuable thing. A startup is an oversized bet that a problem you've identified is going to not only continue to exist but evolve to become a much massive meteor problem that anyone is expecting, which is why it justifies an entire business to continuously be like coming up with solutions around it and you don't see that a lot for PM.

The best PMs should be selling the product alongside the sales team, thinking through the marketing narrative, and thinking through every value prop communication stage.

What advice would you offer to aspiring founders looking to apply to Y Combinator or similar accelerators, especially regarding the selection process and what Y Combinator values in startups?

Honestly, I'm going to advise that people probably won't like it, but it's fine. People you love working with it and just start shipping products. Don't worry about the accelerators or any of that stuff. You don't need to go full-time to get started right away.

Write down all of your core assumptions. Do an exercise to figure out what you know that you don't know. This requires a lot of intellectual honesty because we like to think we know everything, but for the sake of an idea, write down the things you know that you don't know right now that you need to figure out and Then like come up with your sort of mini-map plan for not how you get funding and gain a conviction on the idea itself.

Find people you love working with, honestly. Practice with them, and go through the process of shipping simpler products. just as a team, get used to working together and find people you love working with.

Do you have kind of checklist sort of things to articulate the methodology?

• We need to have a clear definition of the problem we're solving with this potential solution. This is like whatever problem we think we're solving, it has to pass the mom test.
• We need to have a clear definition of who our ICP is. In the ICP, who is the buyer, who is the user, who is the champion, and who is the implementer, having it clearly scoped out MVP and then having a very clear story for what our solution is
• Have five contracted design partners from name-brand firms who want to work with us like partners and scope this out.
• Defining the ICP exercise takes a lot of grunt work and it is vital to hit the PMF

What are the key takeaways from YC, regardless of applying for funding for other startup founders and builders out there?

Always constantly launch doesn't matter what it is. It can be marketing. They can be features. It can be a perspective. It can be anything. Continuously launch doesn't matter if you launched yesterday, launch something today because nobody cares. This misconception I give that you launch once if you're lucky, your launch goes through the roof, and like you're on your way. What I've learned is that the people who look like an overnight success look like that because they spent 10 years launching and have yet to successfully do it. Like that's been the key takeaway constantly launch. Don't worry about yesterday. Just keep doing it because that's how it looks.

What are the long-term goals and vision for your startup?

Yeah. So I think the long-term goal, the long-term vision for us, I think the way that we look at the world is in a few years, we are going to be, we're already seeing hundreds of vertical sales companies popping up for different business types, different industries. In the next few years, we're going to be seeing thousands of them coming out and attacking all sorts of verticals that you wouldn't imagine.

Our vision is to help all of those platforms provide a financial OS where all of their non-card able spending is easily managed through Mercoa. The idea is that we're building the opposite of Stripe. Stripe helps everyone make it easy to accept payments. We want to make it super easy, the easiest as possible for B2B companies to give their users a way to make payments.