

Dear YC Company, How To Use Your $150K Uncapped Note To Your Advantage - eladgil
http://blog.eladgil.com/2011/01/dear-yc-company-how-to-use-your-150k.html

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il
If I were a YC company suddenly getting $150K, I would set aside at least a
small part of it for testing different user acquisition strategies and
business models.

Take as little as $15K and make that your testing budget, money you're not
afraid to lose learning what works and what doesn't.

Create a few different landing pages testing different price points, appeals,
targeting different customer segments, etc.

Or take the patio11 approach and create a few highly targeted mini-sites
centered around a very specific niche or customer.

Then test every traffic source out there, carefully documenting the traffic
volume, CPC, CTR, conversion rate, CLV, etc from each one. AdWords, Facebook,
media buys, buying backlinks, it doesn't matter. You're just testing.

The goal when testing traffic sources/acquisition strategies is to move fast
and fail as quickly as possible. And that's a lot easier when you're not
constrained by a $10/day budget and worrying about every penny.

Don't worry about getting an immediate ROI on that money just yet- you're
paying for valuable data that you can show investors and use to scale your
business. Don't think about the money as wasted- every paid click brings you
more data you can use to refine your campaigns.

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swombat
Not to put your article down, but I'm sure YC startups have at least this
advice, and probably much more (more detailed, more sophisticated and
contextually aware of the specifics of the startup and its market) from YC
(PG, Jessica, Harj, Garry Tan, Paul Buchheit, etc) themselves... so I'm not
sure who this article is targeted at.

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eladgil
I had two audiences in mind:

* General interest. I.e. what are the implications to YC companies themselves? The letter format was intended as a fun way to frame it :)

* The YC companies. From talking to a handful of them, I am much less certain than you are that every founder has completely digested the full implications of the note (various ways to use it, and what to think about avoiding).

As you point out, the YC team has some great people on it, who can undoubtedly
support their startups in navigating some of these issues.

~~~
starfishjenga
Having raised cap and interacted with a bunch of YC alums (hired 2 and friends
with others), I can strongly second Elad's points. Just because they're in YC
and exposed to some very accomplished people doesn't imply that they already
know these things. They have a lot to think about when they're starting up
their companies, so it's hard for them to absorb everything at once, despite
being super smart.

