How would you categorize LinkedIn? They seem to have a marketplace where each new user would be adding value and they have a SAAS model as well. They also do some advertising. I know you said a mature firm will evolve, but I remember even in the earliest days they had both the marketplace and SAAS model.
@flipgoo that model is just another way to take a cut from the seller. Whether you call it 'commission' or 'adding 5% on each item'. Same idea, it is a fee aka cost of using your platform.
The Y Combinator channel is one of the most valuable channels on youtube IMO and this video has been one of the best ones that I have seen not only on this channel but anywhere. Love this and thank you for sharing.
@@AdeJolaosho The Y Comb channel is great at the blocking and tackling of the startup world. One of the channel I enjoy is This Week in Startups. There is a lot there so you have to pick and choose what episodes to spend time on, but the interviews are usually pretty in depth and gives you a great idea on how tech leaders and investors think. In addition to the interviews, there are topics that you will learn various strategies and their pitch show is pretty interesting to see as well as they provide quick fire feedback to the startups. Outside of youtube, there are a lot of great blogs out there but IMO one of the best and most helpful is the blog by VC firm First Round Capital. Check that out and sign up for their mailer. Great stuff.
Funny how for the only business model focused on hardware the short description is basically a negative/risk statement rather than an actual description.
Remember that this statistic is Y combinators personal statistic. Their investment model is favorable for certain kinds of businesses which is why they see success in the types of businesses that work well according to their investment parameters. Not all kinds of startups are not a good fit for y combinator but that doesn't mean they don't/cant succeed. For example hardware businesses are not in their top 100 because they need so much capital. Easy examples are Nvidia or SpaceX. SpaceX needed 100 million plus capital to create a working product that now is almost monopolizing the market of orbital payload delivery.
Amazing you put this public. 🙏🏼I've done b2b pricing for a few startups. It's difficult. My feeling is the biggest thing you need are real customers to work on pricing with. Pricing ultimately is what the market will bear so you have to start doing deals to understand what the market will bear. All startups seem to come down to one basic principle - know your customer (and their problems) well. The hardest part is getting out and finding customers but ultimately it's the only thing that matters. Do it early and often (advice I'm giving myself!).
I watch all of the y combinator channel videos and never comment, but for this one I have to make an exception. That was an extremely informative video and helped me a lot-- thank you!
Very clear explanation! We believe that all employees of the company should be oriented in how the business works and develop their business acumen. We have already advised our team members to take a look!
00:07 Key business model types for successful startups 02:17 SAS, transactional, and marketplaces make up 67% of the top 100 YC companies. 07:00 Transactional businesses are critical infrastructure for companies and have consistent revenue. 09:20 Avoid using ads as primary business model unless a top 10 site on the internet. 13:52 The best businesses have recurring revenue and defensible moats 16:10 Use pricing as a tool to learn faster 20:01 Avoid Cost Plus pricing and focus on capturing the perceived value of your product. 21:53 Find your value proposition and ideal pricing strategy. 25:39 Consider offering lower pricing in exchange for specific benefits 27:31 Adding enough value into the product can support price increase and growth. 31:22 Startups should charge for their product and pricing should be based on value, not cost.
It's funny that basically great web design was one of Stripe's differentiators for years. There are a number of times I suggested/chose Stripe just because the docs were so nice. It did save a ton of dev time. Before modern payments APIs, to setup payments on your website you had to dial a number and it made internet noises for a while, then some guy answered and was like "hello?"
Still gets me thinking that a founder managed to talk to a client who was previously paying $120 a year and asked $120,000 for the same services?! 😂 And then finally settled for $18,000? What's going on?
@@cryptoniku6723 enterprise customer. They were embarrased to pay $120, also they feared the startup was going to fail. Interesting founder indeed but for not realizing this eariler.
Really like your videos. Really wish you could condense them in to 10 minutes or send links to full articles. Your target market for these videos often doesn't have the time to watch 30+ minutes of UA-cam with everything else going on
Hey Aaron, you mentioned that, as early-stage startups, we should focus on a single business model, something I’ve been told a few times before. Apparently, having multiple business models at an early stage can signal that we don’t know what we’re doing. But what if our model is bi-faceted by design? I’m trying to push for what I believe in, but I keep getting the same feedback. Should I stop being stubborn and listen to this advice?
Considering that this is the half-year old video and Gitlab at that time has been charging $19 (screenshots in the video), but as we can see now on their website it is $29 for the same plan... they have watched this video too!
This video was great. Love the idea about pricing models and charging instead of going free. But I also feel that for some startups having a free / basic options with limited functionality is a good way attract new customers. If they need and love the product sooner or later they signup for premium account.
Very useful information and great thank you for that. At the same time video have horrible sound - speaker deafeningly loud at the first letter of sentence and then quiet to be heard in the end of the sentence. Maybe at least editor should google about how to use the sound compressor.
Let's say a company helps it's customers invest, now would this be a marketplace because they are providing investments options or a transactional business because they make their revenue as a percentage of the investments?
What about launching a product for a 2 weeks frío trial and then let customers know that it I am going to charge with either transaction fee or by subscription? Is this a good idea to approach on a small size mobile app product? More specifically a marketplace to bring supplier and consumer into the app itself
This video is brilliant. However, there is usually something not considered, and it is not in this videos: pricing depends on the customer, not on the seller. So, there is no. specific price level where customers drop off. Some customers do at some level others do at some different one. So, we have to be sure our first customers do present our target market, don't we? :)
Thank you! Very informative and very well presented... very grateful! However, at the same time very uninspiring... I know these are hard strategies but would I work with somebody just trying to get a biz model right..? Nah.. though these are critically important they are as inspiring as reptiles!
These business models primarily apply to high growth high investment companies aiming for Billions or 100 mills which makes perfect sense for Y-C but for other entrepreneurs who just want to have several 100k or millions businesses take this list and also learn other things about small/medium businesses. Your plumber or plumbing company makes great money with a simple: build trust, do good work, advertise , hire good employees and send an invoice.
Read the business model guide here: www.ycombinator.com/library/Gh-business-model-guide
Which of the nine models does your startup use?
How would you categorize LinkedIn? They seem to have a marketplace where each new user would be adding value and they have a SAAS model as well. They also do some advertising. I know you said a mature firm will evolve, but I remember even in the earliest days they had both the marketplace and SAAS model.
@flipgoo that model is just another way to take a cut from the seller. Whether you call it 'commission' or 'adding 5% on each item'. Same idea, it is a fee aka cost of using your platform.
I like yhis job
The Y Combinator channel is one of the most valuable channels on youtube IMO and this video has been one of the best ones that I have seen not only on this channel but anywhere. Love this and thank you for sharing.
Hello Daniel. Any other channels that you recommend?
Any other channels you recommend?
@@AdeJolaosho The Y Comb channel is great at the blocking and tackling of the startup world. One of the channel I enjoy is This Week in Startups. There is a lot there so you have to pick and choose what episodes to spend time on, but the interviews are usually pretty in depth and gives you a great idea on how tech leaders and investors think. In addition to the interviews, there are topics that you will learn various strategies and their pitch show is pretty interesting to see as well as they provide quick fire feedback to the startups.
Outside of youtube, there are a lot of great blogs out there but IMO one of the best and most helpful is the blog by VC firm First Round Capital. Check that out and sign up for their mailer. Great stuff.
Definitely
Facts
I lost myself for all those 32:33 minutes. Thank you is not enough for such a presentation. Well done.
Funny how for the only business model focused on hardware the short description is basically a negative/risk statement rather than an actual description.
Remember that this statistic is Y combinators personal statistic. Their investment model is favorable for certain kinds of businesses which is why they see success in the types of businesses that work well according to their investment parameters. Not all kinds of startups are not a good fit for y combinator but that doesn't mean they don't/cant succeed. For example hardware businesses are not in their top 100 because they need so much capital. Easy examples are Nvidia or SpaceX. SpaceX needed 100 million plus capital to create a working product that now is almost monopolizing the market of orbital payload delivery.
Amazing you put this public. 🙏🏼I've done b2b pricing for a few startups. It's difficult. My feeling is the biggest thing you need are real customers to work on pricing with. Pricing ultimately is what the market will bear so you have to start doing deals to understand what the market will bear. All startups seem to come down to one basic principle - know your customer (and their problems) well. The hardest part is getting out and finding customers but ultimately it's the only thing that matters. Do it early and often (advice I'm giving myself!).
"Pricing is not permanent". I needed to be taught this.
I watch all of the y combinator channel videos and never comment, but for this one I have to make an exception. That was an extremely informative video and helped me a lot-- thank you!
This is 100% spot on excellence: content, delivery, clarity, tone, and storytelling. Thank you 🎉
33 minutes absolutely flew by! Brilliant speaker and insights, thank you!
Now, that's what we call "Highly Valuable".
Thanks for sharing!
Chapters (Powered by ChapterMe) -
00:00 - Introduction
00:13 - Outline
00:42 - 9 business models that build billion-dollar companies
02:28 - Leaning from the top 100 YC companies
04:19 - Marketplaces
06:13 - Transactional businesses
07:55 - SaaS companies
08:30 - Advertising businesses
09:42 - Overall lessons
09:46 - What's not in the top 100
11:24 - Recurring revenue consistently creates winners
13:24 - Defensible moats
15:36 - Recap - Best businesses
16:06 - 5 pricing insights from top YC companies
16:33 - 1. You should charge
19:40 - 2. Pricing on value, not cost
23:13 - 3. Most startups are undercharging
26:41 - 4. Pricing isn't permanent
28:19 - 5. Keep it simple
29:15 - Story of Segment - How to charge for your product
32:00 - Wrap-up - 5 key pricing insights
Your startup has a lot of potential
@@arjoaiThank you 😊
11:24
I was trying to figure out how to show my business model on my investor pitch deck. Your video comes like a savior for me. Law of attraction 😅
Investments are the roots of financial security; the deeper they grow, the stronger your future will be."
The deeper your investment roots, the stronger your financial security will be in the future.
Exactly! With my adviser, I’ve cultivated deep investment roots, strengthening my financial security for the future.
This aligns perfectly with my desire to organize my finances prior to retirement. Could you provide me with access to your advisor?
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further.
Thank you for this amazing tip. I just looked the name up and wrote her.
Guys, I'm applying to YC for my startup this year. Wish me luck!!
Luck
What's new !
This one wowed me. Great. Lessons learned. Thanks YC. Thumbs up Aaron.
Thanks Y Combinator for sharing those valuable lessons
The best channel on youtube. no doubt.
This content is such valuable why most people watching something else as of today I can start my own startup
This would easily qualify as having high value content. I needed this video so much!
Funraising is very important in every business outfit. I love the presentations. Thank you.
Man this was the most useful thing I ever heard about business and I heard it in the perfect time while im writing down my business model and plan
Wish me luck 🙏
This is perfect. I will be rewatching this video along with the ones by thiel and graham
The best channel on UA-cam. Contents galore
11:45 recurring revenue 14:10 enterprise, churn is a lot lower 15:11 organic distribution
Very clear explanation! We believe that all employees of the company should be oriented in how the business works and develop their business acumen. We have already advised our team members to take a look!
best lecture I have heard in years! thank you
I really enjoyed this video! Everything was succinct, clear, and actionable! And it provided enough context for the usual advice that one receives.
00:07 Key business model types for successful startups
02:17 SAS, transactional, and marketplaces make up 67% of the top 100 YC companies.
07:00 Transactional businesses are critical infrastructure for companies and have consistent revenue.
09:20 Avoid using ads as primary business model unless a top 10 site on the internet.
13:52 The best businesses have recurring revenue and defensible moats
16:10 Use pricing as a tool to learn faster
20:01 Avoid Cost Plus pricing and focus on capturing the perceived value of your product.
21:53 Find your value proposition and ideal pricing strategy.
25:39 Consider offering lower pricing in exchange for specific benefits
27:31 Adding enough value into the product can support price increase and growth.
31:22 Startups should charge for their product and pricing should be based on value, not cost.
This video is priceless. Thank you so much.
fantastic content!!! I hope everyone understands how valuable this information is.
It's funny that basically great web design was one of Stripe's differentiators for years. There are a number of times I suggested/chose Stripe just because the docs were so nice. It did save a ton of dev time. Before modern payments APIs, to setup payments on your website you had to dial a number and it made internet noises for a while, then some guy answered and was like "hello?"
Exactly as we’ve been struggling with this issue, YC comes through. Thank you!!
Incredible insights ❤❤❤🎉 thank you!
This video is incredibly packed of essential information. Thanks for sharing! 🙏
Still gets me thinking that a founder managed to talk to a client who was previously paying $120 a year and asked $120,000 for the same services?! 😂 And then finally settled for $18,000? What's going on?
Good points nevertheless, but that Founder I want to meet.. 😂😂
@@cryptoniku6723 enterprise customer. They were embarrased to pay $120, also they feared the startup was going to fail. Interesting founder indeed but for not realizing this eariler.
Really like your videos. Really wish you could condense them in to 10 minutes or send links to full articles. Your target market for these videos often doesn't have the time to watch 30+ minutes of UA-cam with everything else going on
Fantastic advice. Thank you for putting so much thought into this video.
direct to points. very useful video. I wanted to do a video exactly like this
Incredibly good content. No-nonsense. Excellent presenter
This was so valuable - thank you for sharing!
Познавательно и ёмко. Спасибо за интересную подачу материала и истории.
How do the 9 business models apply to Healthcare Services companies? e.g. if it's a healthcare provider like Caron Health / Parsley / One Medical?
This is by far the best video I watched from YC.
Thank you SO much!!! It is incredible, super relevant, concise, and comprehensive 💥
This video, like a lot of YC videos is pure gold for founders.
Wow, that’s a lot of good info! Maybe I don’t really don’t need to get an MBA after all. Just subscribe to this channel!
This was very informative and helpful. Thanks
Hey Aaron, you mentioned that, as early-stage startups, we should focus on a single business model, something I’ve been told a few times before. Apparently, having multiple business models at an early stage can signal that we don’t know what we’re doing. But what if our model is bi-faceted by design? I’m trying to push for what I believe in, but I keep getting the same feedback. Should I stop being stubborn and listen to this advice?
What is the business model of Apple according to the nine business models?
That is phenomenally useful. Thankyou.
Fantastic explanation!
Considering that this is the half-year old video and Gitlab at that time has been charging $19 (screenshots in the video), but as we can see now on their website it is $29 for the same plan... they have watched this video too!
What type of business model does apple have according to the nine business models explained in the video?
Awesome teaching. Very insightful.
Great video. Incredibly insightful. Thanks!!
Excellent talk! more please!
Dude 🤓 thank you so much to this team
Some great valuable lessons, thanks YC team!
this was gold 🤝
Really enjoyed watching this...great insight.
This video was great. Love the idea about pricing models and charging instead of going free. But I also feel that for some startups having a free / basic options with limited functionality is a good way attract new customers. If they need and love the product sooner or later they signup for premium account.
exactly. Near the end of the video i shown Gitlabs pricing and it shows the free option with the 2 other paid ones.
Thank you for sharing this knowledge!
This is amazing!
3:24 - I wonder if this is partially due to Y Combinator's preference for these types of companies?
Very useful information and great thank you for that. At the same time video have horrible sound - speaker deafeningly loud at the first letter of sentence and then quiet to be heard in the end of the sentence. Maybe at least editor should google about how to use the sound compressor.
Let's say a company helps it's customers invest, now would this be a marketplace because they are providing investments options or a transactional business because they make their revenue as a percentage of the investments?
Can you guys figure out the whole audio situation? Love the videos but the audio is really difficult to hear (says the old guy).
This is a very valuable vid
extremly valuable , thank you man ❤
Very enlightening. Thank you
wow! its amazing and insightful, thanks!
Great insights
Great content. Thank you!
Wow really great value!
Thank you so much YC
Great insights 🎉
Better described than my mba class
Incredible content.
Highly valuable video
Thank you, very informative
hello! thank you very much. where is the business model guide link?
I didn't understand the part you were talking about lowering price in exchange for your first user, logo etc. What do you mean by that?
If i got this before, may be I can earn more money. Really nice video.
O melhor a explicar sobre startup business no mercado
Fantastic!!!
What about launching a product for a 2 weeks frío trial and then let customers know that it I am going to charge with either transaction fee or by subscription?
Is this a good idea to approach on a small size mobile app product?
More specifically a marketplace to bring supplier and consumer into the app itself
This video is brilliant.
However, there is usually something not considered, and it is not in this videos: pricing depends on the customer, not on the seller. So, there is no. specific price level where customers drop off. Some customers do at some level others do at some different one.
So, we have to be sure our first customers do present our target market, don't we? :)
Awesome info! Thanks.
Wow, that was an amazing piece of content, thanks!
Amazing Video!
Thank you! Very informative and very well presented... very grateful!
However, at the same time very uninspiring... I know these are hard strategies but would I work with somebody just trying to get a biz model right..? Nah.. though these are critically important they are as inspiring as reptiles!
What is the difference between transactional and e-commerce companies?
These business models primarily apply to high growth high investment companies aiming for Billions or 100 mills which makes perfect sense for Y-C but for other entrepreneurs who just want to have several 100k or millions businesses take this list and also learn other things about small/medium businesses. Your plumber or plumbing company makes great money with a simple: build trust, do good work, advertise , hire good employees and send an invoice.
BRILLIANT
Rather than Bio, I think it's more descriptive to call that business model Patent Royalties
These subtitles are so annoying especially the bad spelling at times. The content is brilliant and well done, THANK YOU.
You can literally turn them off
the high frequencies of the audio here is strangely abrasive
Am I the only one who can't find the link?🙈
Read the business model guide here: www.ycombinator.com/library/Gh-business-model-guide
Education comes under which Business Model?
I can't tell if he threw in twitter at 8:42 just as a joke
"Hard-tech" business model is used by a Top 100 Company, while "hardware" business model is excluded. What's the difference between the two?