Jake Stein is the Co-Founder & CEO of Common Paper, which builds standard contracts to help startups close deals faster. Jake participated in Y Combinator’s Winter 2023 batch. I talked to Jake about why he was excited to join YC even after raising a Seed round from great investors like Uncork Capital, YC’s admission process, and what advice he would give to founders wanting to increase their chances of getting in.
- Don't try to game the YC admission process. Instead of hyper-optimizing your application, focus on making progress on your startup idea as quickly as possible. The great thing is that whether or not you get into YC, that’s very valuable.
- It seems plausible that YC's new deal is pushing up startup valuations; it gives YC startups more negotiating leverage, and $500K may be enough to get some startups to break even.
- You are likely to work with the people who interviewed you. Aaron Epstein, Pete Koomen, and Umur Cubukcu, all of whom were on Jake's YC interview call, ended up being the Group Partner and Visiting Partners for the team.
Edited lightly for clarity.
KR: Thanks again, Jake, for joining me today. To start off, could you talk for a minute about who you are and what you’re building at Common Paper?
JS: Very happy to be here, and thanks for chatting. My name’s Jake Stein, and I’m Co-Founder & CEO of Common Paper. We help B2B software startups close deals with their customers. So, part of that is we create open-source standard agreements. So, sort of like the SAFE, but for sales contracts, and that includes NDAs, cloud service agreements, SLAs, DPAs, and so on. And they were created by a committee of 40 amazing attorneys. Those are all free and licensed under Creative Commons. Anybody can use them. And then the other part of our business is we build software for managing those contracts. So, proposing to customers, negotiating, getting deals signed, and then billing those customers so you get paid after you close the deal.
KR: Cool, awesome summary. I was looking at your website, and some of your customers are startups like Dagster and Mercury. Who are some of the other customers so the audience has an idea?
JS: Yeah, so it’s sort of a grab bag of some brand new startups that you probably haven’t heard of – some of the bigger companies that use our agreements are Mercury, you mentioned, and Figma is another one. So yeah, it runs the gamut of software companies that buy and sell software.
KR: Awesome, you participated in YC’s winter 2023 batch, is that correct?
JS: That’s right.
KR: Cool, well, I wanted to start us off by just talking about your mindset when it came to joining an accelerator – was joining a startup accelerator always part of the plan for this company, or what even got you excited about potentially going down this route in the first place?
JS: So, it wasn’t originally part of the plan, and we’re a little bit unusual in that we raised our seed round before we applied to YC. We raised from two amazing firms, Boldstart Ventures and Uncork Capital. They’ve been really helpful, and a little while later, we realized that we thought YC could be uniquely valuable for us. And since it was like an unusual sequence, I wasn’t sure if the Partners at those firms would be down, but they were really supportive and totally agreed with our rationale as to why it would be valuable for us. So yeah, it was a later-stage decision for us.
KR: It’s awesome to hear that your investors supported you going down that route. You mentioned you thought YC could be uniquely valuable – what in particular stood out about the program to you?
JS: Yeah, so there are a lot of things about YC that I think would be valuable for any startup. There are Partners who are extremely knowledgeable, helpful, and deliver amazing advice. I think the nature of the cohorts is really valuable when you’re in a group with many other people who are extremely smart, ambitious, hardworking, and at a similar stage to you. So it’s motivating just to see them making crazy fast progress and thinking, “Oh man,” it’s maybe a little bit competitive, but you want them to win. It makes you question yourself – gosh, they are making so much progress – why can’t I do the same? So, it sort of drives us to push harder. Then, the piece that’s unique about us and YC is that part of what we’re trying to do is create this standard agreement, the standard contract that lots of people use, whether or not they have anything to do with us as a company. That’s really rare. There’s a small number of examples where that has happened. One of the examples is YC, who created the SAFE that all the companies YC invests in use the SAFE, but so do the majority of other startups. So, they are one of the few people who have created a standard contract that is widely used. So, in addition to all the other benefits, we wanted to talk with them and have them in our corner for that sort of thing as well.
KR: Makes sense. Were you just considering YC, or did you also consider other startup accelerators?
JS: We only looked at YC.
KR: Okay, cool. I want to transition to admissions now. Could you give a quick overview of what the admission process is?
JS: There is a written application, which honestly, even if you are not doing YC, I think it’s really helpful to fill out that application doc because it has many really good questions about your startup and prompts your thinking. We also submitted a video, my co-founder and myself. Optionally, you can have YC alumni recommend you. But that’s it. Then, you wait to see if you got an interview. The interview, at least for us, happened over Zoom. And I think that’s still the case that the interviews happen over Zoom. I think the interview typically lasts around 10 minutes. And that was a super intense period – not intense high pressure – but a lot of information transmitted quickly and just many questions. Either later that day or the next day – I think probably later that day, we found out that we got in.
KR: Who was on your interview call? Was it the YC Partners, were they using alumni, or was it a mix of both?
JS: Aaron Epstein, who ended up being our Group Partner, was on the call. Also, a few people who would become our visiting group partners – Pete Koomen from Optimizely and Umur Cubukcu from Citus Data – were on the call, and Kat from the YC team was on it as well.
KR: Can you give some examples of the types of questions that were asked? Also, I’m curious – I Imagine you prepared a lot for that interview – were there any questions that caught you off guard or surprised you?
JS: I don’t remember a lot of the questions. One of the ones they asked that I was taken off guard by was, “Why haven’t you made more progress?” Which sort of put me back on my heels in the moment. It’s not a question that had been asked to me before. And again, it wasn’t them being negative or anything like that. It’s just you’ve been working on it – what is the limiting factor? Why haven’t you moved faster? Why haven’t you gotten more users, customers, and things like that? So, that was a great question that I was unprepared for, but it prompted a lot of thinking on my part. They asked about our strategy – why do the standard agreements? Why not just build software? Why not just use a contract that someone else has created? Why do we have to do it? They talked about our target customer – why this kind of customer versus that kind of customer. So it was a lot of questions about – we had made a bunch of decisions and done a bunch of things against those decisions – and they were pushing and pressing and saying why this why not that just to see how we make decisions and how we work basically.
KR: What advice would you give to a founder to increase their chances of getting into a program like this?
JS: It seems hard to game this process because they’re no BS. They’re not looking for slick stuff or anything like that. I think it’s being honest and being as formidable as possible. I think it’s probably not worth hyperoptimizing the application. What is better is just trying to progress on the startup idea as quickly as possible. So, if you have an idea and haven’t talked to any customers, then talk to some customers. If you have spoken with customers but haven’t asked them to pay, ask them to pay. If you have a prototype but haven’t built anything, then build something. So I think the best way to get in is to make progress on your startup idea, and the great thing about that is whether or not you get into YC, that’s really valuable. Every once in a while, people will ask me, “hey, can you review my application or talk to me before the interview?” and I’m happy to do that – but the most important thing is to make your idea better, work on your startup, and make progress.
KR: Nice, I really like that advice. I think the more clarity you have around your startup, the better you’ll do during the interview process, and you get that by actually doing stuff.
KR: I know YC Partners give feedback to the people they reject. I was curious: Do they provide feedback when they accept you – Do they tell you they liked X, Y, and Z things about your startup?
JS: I got both positive and negative feedback. I don’t think I got much of it in that call. The headline of the call when they were accepting us – hey, we enjoyed talking with you, we think this could be really big, we’d love for you to join. Then, I had a bunch of clarifying questions about what exactly happens in the program and how it all works. But, separately, we have office hours periodically, and they told us we really like this about you, but it seems concerning that you haven’t made progress in this way. So that is part of the thing – it seems like you’re doing really great on this but it seems like you’re not getting traction in this way. That’s definitely part of the YC relationship, but not in that original call.
KR: YC has increased the size of their cohorts – it was 270 for your cohort based on what I saw in the directory – did you see any tradeoffs with the larger cohort? What were this size’s benefits and maybe some of the downsides?
JS: I’ve only done it once, so I can’t really compare to when it was smaller. One thing to note is that while that is the size of the batch, I don’t know if 270 is exactly right, but I think that’s probably the right order of magnitude. There are groups within the batch, and there are sections within the group. So you have 1:1 office hours – co-founders with one of the Partners or two of the Partners – that’s just you folks – then there are group office hours where it’s maybe 7-10 companies – that’s a small group that you get really close with. So there are opportunities to have the close-knit thing that I imagine it was like 10-15 years ago. So I think, on balance, it seems great that the community is bigger. I don’t think there is a downside for me personally that it’s bigger. The Partners that I interacted with were unbelievably amazing. Maybe in the early days, everyone had a 1:1 relationship with Paul Graham, and I never met him. So, maybe that’s a downside. But yeah, I did not observe a downside to having YC as an organization be bigger.
KR: So they made it feel a lot smaller by how they structure it. I think one of the obvious upsides is the liquidity in the network. So there is more distribution – I imagine that’s really helpful for a company like yourself selling to startups in YC.
KR: Gary Tan returned to YC. What is he working on, and what are your impressions from being around him?
JS: At our batch retreat, he gave at least one talk, maybe a couple of talks. I thought he was super smart, empathetic, and a great presence. I don’t know that when YC does something it’s because Gary is in charge now versus whoever was in charge before. But, as a human he seems great. Again, I’ve only seen him talk a couple of times. The short answer is I don’t think I really know what his impact is on YC; other than that, I generally get positive vibes.
KR: I know you raised money before YC. Did you raise money for Demo Day?
JS: Yeah, we raised a little bit more after Demo Day. So, like you said, we had raised our Seed round before YC. The demo day environment is like a really special fundraising situation and so we wanted to take advantage of that in a small way. We were not trying to raise our Series A. But, our existing investors put some more in, and we set it up so we could take a little bit more from the Demo Day group. We thought it was a special opportunity to fundraise with such an amazing group of people. Yeah, it was really wild, so I’m glad we could participate in that.
KR: Are Demo Days back in person in San Francisco?
JS: I don’t know about this batch, but for our batch, it was virtual. I did not participate in Demo Day because my daughter was born 2 days before, so my co-founder, Ben, did the presentation and absolutely killed it. I had a Zoom going on over here while I was changing diapers. It was amazing to watch him.
KR: Is YC’s new deal pushing up prices, or is it primarily influenced by how far along the startups are in YC batches?
JS: I don’t have anything to compare it to. But, I would say that startups get more money with the new YC deal. I think that would give startups more negotiating leverage because there are companies with $500K that can get to breakeven. So, they have a better alternative to a negotiated agreement. So they could walk away if they don’t like the terms. So it seems plausible that because the new deal puts the companies in a better position, they end up with better valuations on average. I imagine there are a bunch of other factors, too; it’s a market with interest rates. But it seems plausible that would be at least part of it.
KR: Now that you’re finished with the program – how are you continuing to engage with the community? Is it talking with founders from your batch, or are there certain products that YC built that you use frequently?
JS: Yeah, I use Bookface, the internal forum, probably at least once a week – sometimes a couple of times a week. Some of it is just seeing the posts, looking up investors, or checking out what deals we can get for a product we are trying out. There is a Slack for our group that I use to communicate with people. On Thursday, I have a catchup – we meet once a month with the folks in my section - just those ten startups. So, we have a bunch of touchpoints with the YC community. I’m also talking with someone who works at YC next week to get their advice about something. So yeah, we get a bunch out of it.
KR: Last question: do you recommend YC to all your friends starting tech companies? Or are there certain types of companies or situations where you think it is better to raise an angel or VC round and go from there?
JS: In general, I would recommend [YC] to everyone. I’m sure there are certain circumstances where it doesn’t make sense. But for the most part – definitely.