
Meet Kirsty Nathoo, Y Combinator’s Secret Financial And Operational Weapon - leahculver
http://techcrunch.com/2013/02/09/meet-kirsty-nathoo-y-combinators-secret-financial-and-operational-weapon/?icid=tc_home_art&
======
pg
Secret weapon is the perfect phrase to describe Kirsty. She handles everything
to do with money and investors at YC, and the situations she has to unravel,
dealing with early stage startups, are often appallingly complicated.
Considering the number of startups we fund, I bet there is no one in the world
who understands more about the intricacies of early stage startup finances.

~~~
kmthompson
She sounds phenomenal. Doesn't YC have 3 female partners? They are not all
listed on the about pages (<http://ycombinator.com/people.html>).

~~~
rdl
Jessica, obviously. Kirsty. And Carolynn Levy (legal), who is the most recent
addition.

~~~
kmthompson
Thank you!

------
pbiggar
Totally deserved article, Kirsty is amazing.

There's a story in the article about Kirsty meeting a founder with a wad of
cash at SFO. She did exactly the same for me when I arrived: waiting at the
airport with a check so I could pay rent my first day in MV. Except this was
on New Year's day, and my flight was delayed two hours. Thanks Kirsty!

~~~
bambax
Wow. Cool anecdote!

I briefly interacted with Kirsty during this year's Startup School: you really
feel she WANTS to help you (which is an amazing experience!)

Then we exchanged a couple of emails and she was more than courteous. Really,
really nice person.

------
breck
> Nathoo tells us that the last of the Sequoia money was used in the Summer
> 2012 class. Now Y Combinator is completely self funded through the money the
> incubator has made through its investments in startups (i.e. exits)

This sounds like an amazing accomplishment! Was this seen as a big milestone
for YC?

~~~
pg
Sort of, except we started out self-funded too. So it's really like going back
to the way things used to be.

~~~
seeingfurther
If I'm not mistaken the difference is now you're funding with profits and in
the past it came out of your own pockets. That's a cool milestone!

------
kposehn
Kirsty rocks, for the record.

What surprised me is the claim "Y Combinator and most investors will only
invest in companies that have been in incorporated in Delaware, and many
founders don’t know this."

This was quite surprising. PG: is this actually a criteria instead of a just
preference? Or did TC get it wrong?

~~~
pg
Allow me to give you an illustration of how things work within YC:

How would I know? Ask Kirsty.

~~~
kposehn
Ha! Will do :)

~~~
kirsty
Applying to YC as a non-DE company does not reduce your chances of being
interviewed or accepted. However for us to be able to invest in so many
companies in such a short time frame, we do require you to convert to a DE
C-Corp if we agree to fund you. I'll help you with that though, if the time
comes!

~~~
seeingfurther
Kirsty ~ Do you allow your startups to execute the formation/conversion
documents with electronic signature services like HelloSign & Echosign or do
you require actual hard signatures?

~~~
kirsty
We try to do everything through e-signatures - less chances of PDFs getting
lost than bits of paper. And of course at all opportunities I tell founders to
use Hellosign :-)

The only document that is wet signed is the 83(b) election that is sent to the
IRS since they not sure yet about e-signatures.

------
leahculver
Kirsty is the best. She's helped so much with the worst part of startups - the
paperwork.

------
nowarninglabel
I like Kirsty's quote: "I was shocked at the amount of trust that was being
placed on me at first." It reminds me of how when I started at my current job,
our head of engineering gave me logins and passwords for every piece of
software we had. In my first meeting with her and my manager, my manager says,
"Woah, I don't even have access to half this stuff." It was really inspiring
to know they trusted me enough with the keys to the kingdom, and it made life
so much easier than the previous companies where I had to fill out a form for
access to just about anything. More companies could do well to place more
trust in their employees like this.

------
danielpal
People often underestimate how important the "back office" things are and how
much help you get from an incubator. Apart from Kirsty, we've gotten a great
amount of help from Jon Levy (YC lawyer) on legal stuff and of course Kirsty
who's always sending us e-mail reminding us of taxes etc.

------
swampthing
As my cofounder and I like to tell people, Kirsty is one of the world's
foremost experts on startup formation / founder issues. It's hard to imagine
finding someone who helps more startups with as wide a range of issues as she
does. This article is definitely spot on and well-deserved!

------
eduardordm
And she still has time to break our heart with that rejection email.

~~~
SurfScore
Ironic, someone known as being so helpful within YC is known as the
Doombringer outside of it

~~~
eduardordm
(I was just kidding/being sarcastic, I hope you are too, Kirsty is great,
never thought of her as a 'doombringer')

------
rdl
Kirsty is amazing. I was surprised to learn (when she became a partner) that
she wasn't always a partner.

------
tonyx
Kirsty is one of the most amazing people I have met while at YC. Low profile,
high impact.

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argumentum
I advise anyone starting YC to listen to Kirsty, in fact _to obey Kirsty_.

It will make your life so much easier.

------
codebaobab
"Another role Nathoo takes on with founders and startups is an accounting
advisor. She’ll ensure that every company incorporates in the state of
Delaware, and if they haven’t done this, she’ll help with that process. Y
Combinator and most investors will only invest in companies that have been in
incorporated in Delaware, and many founders don’t know this. Nathoo says that
of the current class of 47 startups at Y Combinator, only one company’s
incorporation documents were problem-free when joining the program."

If Kirsty were willing to publicly share any part of her accumulated knowledge
in this area, I'm sure I wouldn't be the only one to appreciate it.

~~~
kirsty
When we agree to fund companies, they fall into one of three buckets: 1) not
incorporated at all 2) Incorporated outside Delaware and / or as an LLC 3)
Incorporated in Delaware already

Those in 1) are by far the easiest to deal with - we have a standard process
to get everyone set up so that going forward there won't be any problems.

Those in 2) start to get a bit more complicated and we have to work with the
founders to convert to a DE C-Corp. Sometimes that means just starting anew
with a new company and sometimes, if there is too much corporate history,
converting the companies. This takes up some time and depending on the
original state can be costly and time-consuming. But it all works out in the
end...

Those in 3) are the ones that are often the hardest! There can be problems
around only some of the paperwork being completed or signed, founders don't
have vesting on their stock, uneven stock splits between founders (a strong
indicator of future founder breakups), needlessly complicated cap tables, not
enough stock authorised for us to buy our shares - the list goes on. All this
can be fixed too!

The founder that says to me "we're incorporated in Delaware so you can invest
in us straightaway" is usually the one that becomes one of the most
complicated companies for us to invest in.

My advice would be that if you're applying to YC, then don't incorporate
unless there is a specific reason to. It is much easier and cheaper for you in
the long run to use our process.

~~~
cperciva
_uneven stock splits between founders (a strong indicator of future founder
breakups)_

I've heard lots of stories about this issue, but I think you're the first
person to actually have a statistically significant amount of data to back up
what you're saying.

Can you elaborate on this point a bit? In particular, I'm wondering if it's
the _uneven stock split_ which is the problem, or if that and founder breakups
are merely both symptoms of an underlying issue -- say, different levels of
commitment from the founders, or unequal status levels.

Or put another way: If a team applies to YC and says that they plan on a 67/33
equity split, would you convincing them to change to a 50/50 split improve
their chances of success, or are they still at a disadvantage compared to
teams which originally planned on a 50/50 split?

~~~
kirsty
The reasons I hear often for uneven stock splits are because one founder came
up with the idea, or has been working on it for a month longer etc etc. When a
company is in its absolute infancy, this seems like a logical conclusion but
what about when the company is 5 years old? What we see is that even after
only 3 months of YC when the founders are all working as hard as each other
under stress and often the idea bears no resemblance to the original idea,
that this starts to become a problem. The founder with less stock starts to
feel like this is not such a good deal for him / her and it can lead to
problems.

There are other reasons for uneven stock and as you mention, different levels
of commitment or unequal status levels cause problems too. This is something
that we would seek to understand more during the applications process when we
see it and to try to make sure the founders have really thought through
whether this is what they want. The key to a lot of this is open communication
between the founders.

Of course, there are some situations where an uneven split does work. An
example would be a founder has a mortgage and a family to support and
therefore takes more salary in exchange for less stock.

We do not insist on an even split in any situation but I do always make sure
that the founders think through their decision carefully.

~~~
manidoraisamy
Kirsty - What's your opinion on the recent TC article on this subject?
<http://techcrunch.com/2013/02/09/the-perfect-cap-table/>

------
rdl
I wonder who the Kirsty character is at 500 Startups, Tech Stars, AngelPad,
etc.

------
jasonwilk
We had the pleasure of being in the first YC class when Kirsty started. She
was very helpful throughout the entire process of the program. I think she
even has her own office hours now!

Congrats on such a praising article Kirsty.

------
hzay
Way before I read the last line of the article I was convinced that she had
one of the best jobs in the world - she's surrounded by [presumably] really
smart and passionate people, solves problems of varying nature and challenge,
and has immediate impact. It's weird because I always thought of accounting as
an uninspiring and crushingly boring field, but obviously I've been wrong.

------
Havoc
It seems to me that every organisation has 2-3 people who keep all the balls
in the air. The company I work at certain does. They don't rank highly job
title / power wise...but if they get hit by a bus...heaven help us. e.g. We've
got one person coordinating about 300 people's schedules.

------
TheMakeA
I am constantly being surprised by YC. They are moving quickly and I love it.
A few months ago pg talked about trying to fix some of the scaling woes and
you can _already_ catch a glimpse of some of that work in articles about YC.

------
monsterix
A few months back I was sort of afraid to write to PG/YC directly. We were
putting in our first submission on HN (our web app) when we found that the
domain name we held was somehow in HN's blocked-list.

After some hesitation I wrote a short mail (with etiquette of writing to busy
people) on YC's email address and within seconds Kirsty replied to me. It made
me feel good when she told us that "if it is blocked, avoid posting it again
on HN. Have patience, PG will unblock it in a few minutes."

After sometime I received an email nod from PG too. From that point I just
fell in love with Hacker News.

~~~
borski
Sorry, why exactly would you be afraid of emailing PG/YC? Is it the 'fame'
thing? It's a common misconception, in my experience, that people who are
considered 'important' hate to be contacted by people like you and me. Not to
mention that the importance of YC/PG is certainly community-based - not to
take anything away from them, but my mother has no idea who PG is. :)

~~~
monsterix
I guess this has something to do with being self-critical. Especially, when
you're a stranger introducing yourself to someone _accomplished_ with a
'problem' that you're currently facing. I didn't inadvertently want to cross
the line in excitement or fear, but right as you said my fears were almost
certainly unwarranted.

