I went to Y Combinator’s Startup School on Saturday (that’s YC-founder Paul Graham, in case you don’t know) even though most people in Silicon Valley see the material there as “too basic.” My goal is to perpetually learn and apply and to learn as much from the audience as from the killer line-up of speakers Y Combinator recruited.

What I learned I posted to Twitter. My notes are in my facebook album.

Anyway, these are The 9 YC-Types that I met that day — and a fewof the things you can learn from them:

1. Mr. Never Woken Up Before Noon. Codes and compiles well into the early morning. Only wakes up at 9AM for killer content. Fresh in from Europe. Is full of wonderment that 12 zip codes in Northern California contain 90% of venture money. Doesn’t know about the 9 VCs you’ll want to avoid meeting, but gosh darn they have great accents.

1. Mr. Silver Bullet Detector. A.K.A, a VC. Wants to find the next Google, Myspace, Yahoo!,

and get his carry (you-know-what) popped with the this 3rd fund.

1. Mr. DDSS Founder Presenting. DDSS stands for Dumb-Down-Sandbag-for-Success. During AM presentation said stuff like, “money matters with how many people you hire. The more money you have the more you can hire.” No where near as dumb as the things he says — even though he pretends he didn’t present during lunch.

1. Mr. Glad-Hand Palm-Presser. This might be taken as good or bad news, but no one fit this description here.

1. The All-Academic. Took copious notes of everything said, multi-tasked by updating the blog and googled relevantly real time. He pees on his own ideas and just needs to dumb down a lil like speaker #5 and speaker #6.

1. Mr. Moonlighter. Works corporate job but fantasizes about jumping ship. Committing to 6 hours on a sunny Saturday is as close to fully immersed in start-up culture as he’ll ever be.

1. Mr. Ohio in The Hood! From middle America and spooged when David Hansson

from 37Signals gave his 2000/$40/12 months 1,000,000 formula. Avoided the entrepreneur rock piles that collected outside by the pizza tables and somehow met the three other Ohio State Buckeyes in the room

1. The Aberration(s). One really hot girl. One guy over 60. One Chinese restaurant owner. One person who brought their schnauzer. I miss Baxter.

1. Mr. Multiple Question Asker. From one of the two audience microphones, they’ll make statements, ask four part questions and generally bully as much as possible.

1. The Jeff Bezos Coat Tail Rider. Somehow got Bezos to pitch his

Animoto.com offering of pics + video app that mixes audio. After Jeff’s four slide power point, am sure Mr Coat Tailer, a.k.a. Brad Jefferson, is

knee deep in term sheets.

Larry Chiang is the founder of duck9 and a frequent contributor to Found|READ. His earlier posts include: 9 Techniques For Closing a Deal via Voicemail, How to Work The Room; 8 Tips On How to Get Mentored ; and 9 VCs You’re Gonna Want To Avoid, 9 Things Stanford B-School Won’t Teach You and most recently, How to Build Good Credit for Your Business.

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Tags: 37Signals, Amazon, Animoto, Brad Jefferson, David Hansson, duck9, facebook, Jeff Bezos, Larry Chiang, Ohio State Buckeyes, Paul Graham, Twitter, YCombinator

I’m a repeat founder and YCombinator groupie. I’m the wrong age group to apply to YCombinator, but I’ve still learned a lot from the incubator from afar — like, the virtues of micro-loans and “entre-sumers.” This is my story.

More than a decade ago, for my first startup, I was fortunate to have found a successful but semi-retired former VC as a Board member and a mentor. As I learned more about his background, I discovered that my low-key friend was actually quite famous and had made seed investments in Sun Microsystems and a few other pioneer semiconductor and networking companies in the late-70’s to late-80’s.

One day I asked him how he managed to find these choice companies, almost all of which had become the pillars of Silicon Valley. He smiled and said, “We were lucky”.

I believed him. Many successful entrepreneurs and investors were successful because they were at the right place at the right time. It helps too that when the right opportunity presented itself, they also had the right skills, right experience, right circle of acquaintances and the right financial resources.

So I constantly ask myself, “What made him so lucky in the past?”

And more importantly, “Would I ever be so lucky in the future?”

I was 15 years old when I immigrated to San Francisco. Back in those days (early 70’s), the dominant retail outlet was Sears Roebuck, which sat high on the hill on Masonic and Geary. I remembered every Wednesday, Sears would take out a full-center-page ad on the Chronicle, advertising all the items that would go on sales the coming Sunday.

And that was how people consumed. If my dad needed a new circular saw, he would wait for the Sunday sales. And if he had bought the tool a week earlier at regular price or if he had missed the sales by one day, that was just too bad. And if he had brought it home and didn’t like it, that was also too bad (unless it was defective which never happened since everything were over-designed and were made in America).

Today, the same store is occupied by an Office Depot and a Best Buy, both struggle to compete with Costco (which is only two miles away and has more parking). Today, if I need anything, I would search online, read all the reviews, and check to see if they are available from Costco. If they are not, then I check Best Buy, and so on.

The point is that I can buy anything anywhere at any time. If the item goes on sale the next week, I can bring the receipt back to the store and be refunded the difference. If I don’t like the item after using it, I can get my money back with no question asked. If I throw away the original packing material, it is not a problem. If I have lost the receipt, it is also not a problem. They would gladly look up my membership number and would know immediately when and where I had bought the item.

The point is that this dramatic change of consumer pattern over the last thirty-five years was completely enabled by technology. As an investor, my VC friend was lucky because he was presented with ample opportunities to invest in an unlimited number of innovative companies, each of which was to invent one particular building block for the emerging infrastructure. All he had to do was to trust his instinct in picking the right team and mitigate his risk by spreading the investment around.

So that was his luck. Where is mine?

I believe the trend hasn’t stop. The trend continues and is in fact accelerating. But instead of making the distribution channel more efficient for hard goods and making it easier for the consumers to spend discretionary money, we are now making the distribution channel more efficient for information and entertainment.

When I first came to United States, we didn’t have cable, we didn’t have satellite, we didn’t even have VCR or DVD (although we had a one-button remote). Instead we had a choice between VHF and UHF. For all practical purpose, we had only three TV channels. Ironically, this was called broadcasting even though the channels through which information was distributed were indeed very narrow.

But the idea was that since the distribution channels for information were so few and so limited, they had to “cast” the information to a broad base of audience in order to make money. So there were no customization and no targeting. Information and entertainment were created for the consumption of a mass audience and no one had any choice but to cater to the least common denominator.

Today we have the opposite; we have narrowcasting. With always-on Internet, search engines, peer reviewed aggregation portals and social medium sites of all variety, we have lots of channels (ironically “a series of tubes”). And it is possible for each of us to “cast” specific information to a very narrow niche of consumers and still make money.

So now the burden is not in gaining physical access into the channels, but rather in delivering information and entertainment that is both relevant and authentic to our target audience. Otherwise consumers would do the equivalent of channel “flipping” (with another one-button remote called the mouse), except now the choice is not between three channels, but perhaps between three million channels.

Last Friday, I wrote an article giving advice to the summer class of aspiring YC’ers. This week, the YC selections have been made and obviously lots of good candidates were selected and lots more were not.

So the question is what do you do next? If you were selected, what you do next is obvious and has already been prescribed by PG (or is it O.G.?). But if you didn’t get selected, then my guess is that most of you would continue anyway and chances are that you would be successful in spite of this minor setback.

Having had my shares of rejections as a struggling entrepreneur, I believe most of you would be wondering right now what you might have missed since you weren’t given a chance to be a member of the YC community.

So let’s have a discussion on what YC is. Because if you don’t know what YC is, then you wouldn’t know what you are missing. And if you don’t know what you are missing, then you wouldn’t know where else to look for the same support and benefits.

Interestingly, there has been lots of discussion among the YC’er on what YC is and whether or not it can be emulated, replicated, or extended into a different context.

YC is micro-loan program. Now don’t get me wrong. Everyone agrees that YC is not a VC and the value that it provides goes way beyond money (which by the way is very small amount of money if not a micro amount of money).

The point of this article is not to get into yet another argument about YC versus micro-loan. Although for your entertainment, I would submit the following, which is the mission statement of the Microloan Foundation:

“We provide … basic business training and continuing guidance … enables them to develop self-sustainable livelihoods …”

So in some respects, YC is a combination of a peer-support group, a boot camp, a finishing school, a spiritual guru, a den mother, a personal trainer, a career counselor, a dating service (for future investors), a therapist and a one-use ATM card. It is a glorious concept and I wish all of us struggling entrepreneurs were provided with such an opportunity.

But not having it does not mean that you cannot succeed because having it could not have prevented failure.

And that’s not even the true genius of YC.

To understand the true genius, we need to go back to the trend.

In summary, narrowcasting is the new trend. We can now deliver specialized products and services (i.e., information and entertainment) very efficiently and very cost-effectively to a small, well-targeted population and can make lots of money doing it.

The genius of YC is to understand that superimposing on this trend is another trend, which is that we are in the midst of a great intergeneration transfer of wealth (among the middle class), a wide spread phenomenon that has never been seen in the Western world.

I am not going to make the same mistake that Hillary had made when she spoke at her daughter’s graduation which is to say something to the effect that, “you young folks have it easy”. No, not at all. I don’t believe that for a minute.

But I do believe that the younger generation have more resources and have more financial support from their parents and their grandparents than we did. And I do believe that the younger generation has more discretional spending power and at an earlier age than their predecessors. But at the same time, they are inundated with demands on their time and attention span so their need more tools and more filters, not less.

So in a nutshell, by natural selection and by design, the YC’ers are younger and are representatives of their own generation and their need is a harbinger of what’s to come in terms of evolving consumer behaviors.

Understanding these two synergistic trends, one on distribution and one on consumption, is where opportunity begins. And I believe the YC’ers are in fact “at the right place at the right time” and could reap potential financial successes far greater than those of my VC friend of the last generation.

Therefore the true genius of YC is how it empowers and how it provides a nurturing environment for the young entrepreneurs who are both top-notch technologists and the perfect “surrogate” consumer for their own invention.

In the old days, we would take a bunch of money from the VC’s, build a product, and when it is ready, launch and see “if the dogs would eat the dog food”. Today there is no need to do that.

By being both the entrepreneurs who invent the product and the customers who consume the product, this new generation of “entre-sumers” are themselves the alpha “dogs”. And if they execute properly, there would be plenty more beta dogs from their generation who would follow.

So this is in fact like the lion looking for courage or the tin man looking for a missing heart. If you have been selected by YC, they would have given you the gift that you already have. If you didn’t get selected, it is now up to you to find validation elsewhere.

But every validation along the journey is temporary, even one from YC. In the end, the only permanent validation is if the other dogs are in fact eating your dog food.

So if you didn’t get selected by YC, it is now up to you to seek the gift that you would have received which is that as an entrepreneur and a consumer, you have within your grasp the synergy of the two that would put you in the right place at the right time.

Now that the YC summer contest is over, you should take the weekend off. Enjoy it with your friends and family but by Sunday night, it is time to get back on the proverbial bike again and peddle like hell.

In summary, whatever you do, don’t get stuck in time. No one needs permission to start a startup, not even from YC. It is time to make your dream a reality. There are no more weekly sales at Sears. In fact, there is no more Sears, at least not on Masonic and Geary.

Good luck!

Denny Miu is a cofounder and former CEO of Gigamon Systems. He has extensive experience in developing technology, products and business relationships. Denny has also been a Professor, an engineer, an entrepreneur, a team leader as well as an individual contributor. His previous post for Found|READ was Calling YCombinators: Lessons from a “Serial First-Timer”

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Tags: Best Buy, Costco, Denny Miu, Home Depot, Microloan Foundation, Sun Microsystmes, YCombinator

I don’t think of myself as a serial entrepreneur since the terminology is most commonly used to describe someone who has had multiple successes (which I haven’t). But I also cannot pretend to be a first-timer — without having to explain the tread marks on my forehead.

So I am a hybrid. As such, I do have a few lessons that I can share which I have been writing up as a book, entitled “Survival Guide for Bootstrapping Entrepreneurs”. I have finished five of the planned ten chapters and I have posted them online on my blog, StartupForLess.org.

10. Why Startups Fail and Why Gigamon Should’ve Too

9. How to Turn Your VC into Your Worst Enemy

8. What I Learned From My Dad Who Taught Me How To Ride A Bicycle

7. Make Money Then Make Meaning

6. Team Building versus Bread Making

Given that Tuesday was the deadline for applying YCombinator summer funding, I imagine right now there must be at least a few hundred aspiring entrepreneurs (founders and cofounders) waiting to jump in with both feet. At the risk of being presumptuous, I’ve distilled my lessons-learned into the following three points and offer them to the contestants of the YC contest with my best wishes.

Remember: There are no losers in entrepreneurship except those who stop trying.

A. Entrepreneurship is a Responsibility

Entrepreneurs have a responsibility to focus on making money.

Entrepreneurship is about the “new” violently overthrowing the “old” and it is not an abstract exercise. In doing what we do and asking others to follow, entrepreneurs affect people’s life and the life of their families. And we affect them profoundly.

I have learned that building a successful startup requires the perfect alignment of many people’s diverse interests and desires. To succeed, we must figure out what rocks our hearts, our minds and our souls, providing our constituents with what they need and what they want.

People are driven by many things: money, fame, power and destiny.

But as the company grows and as more and more people are brought together, I have learned that the only thing that everyone has in common would be money. So my experience is that from the beginning, as an entrepreneur, we must focus entirely on making money. Doing otherwise would be irresponsible.

B. The Times They Are a-Changin’

Being an entrepreneur means you don’t give up which also means that you are bound to try to solve the same problem over and over again, albeit with more experience, and expect different results.

So the one thing that you have to keep in mind is that in time everything changes and it could change even between the time you put together the team and the time you receive initial funding (from YC or anyone else), or between the time you execute and the time you ship products.

My experience is that peripheral vision is as important as vision and you have to learn to make adjustment as reality presents itself.

In other words, to be successful as an entrepreneur, you need both a compass (which reacts to external stimulus) and an inertia guidance system (which is inside your heart but very important in guiding you through the dark clouds).

In my last startup, it turns out that being our own “surrogate” customer was the most important ingredient for our success.

My fellow co-Founders had worked in the network monitoring side of the networking business for many years. They knew about their customers’ pain first hand because as a monitoring tool vendor, they knew how hard it was to deploy their own products. So in a sense, they were frustrated that their ecosystem was disjointed and the product that they invented had been their dream tool.

Had they not been long-time veterans of their own industry (which they help built in the past 20 years), they couldn’t have gotten that important insight by just talking to our customers. Customers know what to object when you present them with an imperfect product but not when you present them with a perfect PowerPoint.

Henry Ford had said that if he were to listen to his customers, he would have built a faster horse because that was what his customers wanted.

To put it in more modern context, it is sort of like Steve Jobs and his iPod (and iPhone). It is hard to imagine how things could have become what they are had Steve not been a music fanatic (not just a fanatic). Steve didn’t rely solely on his customers neither to define his dream toy. Instead he listened to his heart because he believes he was the perfect surrogate customer.

And that was what we did. We listened to our hearts (even though we were just a bunch of engineers).

In a way, this explains why the demographics of YC’er tend to be younger (at least much younger than me). Part of that is self-selection but part of that is by design. I believe time is a-changin’ and we are in the midst of a great intergenerational transfer of wealth. My kids clearly have much more resources than I did when I was a college student, not just because of the resources that I can provide but also from their grandparents.

This combines with the dramatic improvement in channel efficiency (for information, as opposed to for hard goods which was for the last twenty years) really change the consumer pattern of the younger generation. So my generation of entrepreneurs would be a far less optimal “surrogate” customer of the new era.

It is now your turn … having miss the opportunity to invent Ethernet and desktop computing, you can start inventing the next Facebook or the next YouTube.

But being young often means being inexperience.

C. Inexperience is not a Sin

Experience really matters in a startup.

However, as it turns out, experience is important but judgment is too, and everyone can be a victim of his/her experience (which ironically could often cloud their judgment). Much of a startup’s success and much of the difference that an entrepreneur can bring to a startup have to do with his/her ability to make the right decision (at the right time).

In a startup, it is actually not about making the right decision but about making the decision right. So being a successful entrepreneur requires experience but it also requires good judgment.

And good judgment has to do with when and how to build up creditability with the team and the shareholders, and when and how to cash in your political “earned” capital to mobilize the company behind an unpopular decision that you have made based on imperfect data.

In summary, experience is necessary for a startup but not sufficient. On the other hand, paradoxically, as I have learned the hard way, as an entrepreneur, having a strong will to succeed and the tenacity to follow through on difficult decision is sufficient but not enough.

You need a little of both (and a whole lot of luck, with the definition of luck being the complete absence of bad luck).

Good luck to all you First-Timers and Serial First-Timers!

Denny Miu is a cofounder and former CEO of Gigamon Systems. Denny has extensive experience in developing technology, products and business relationships. He has been a Professor, an engineer, an entrepreneur, a team leader as well as an individual contributor.

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Tags: Bob Dylan, Denny Miu, Gigamon, YCombinator

Editor’s Note: Serial founder Tony Wright recently completed a 3-month stint at the incubator YCombinator, where, in November 2007, he and two partners launched RescueTime, which hawks free software to help individuals and businesses spend their computing time more effectively. After successfully launching their consumer offering (7% week-over-week growth!) Tony and his team are preparing to release a version for businesses. They’re also now looking for seed funding. We asked Tony to share with F|R what he learned from the YCombinator experience.

RescueTime is coming up on the end of our formal YCombinator experience, and I thought it would be interesting to reflect on the things we did right and the things we did wrong. It might help future YC aspirants!

For those who aren’t familiar with YC, it’s basically a new kind of funding animal that takes 6% equity in startups that (usually) have barely more than an idea, and generally don’t have a deep background of successful entrepreneurship. In exchange for this, YC offers $15K-$20k in funding (“raman/rent money” as I call it), weekly dinners with Valley luminaries, and a big ol’ Demo Day at the end where you present to hundreds of very motivated investors. Lots more detail is here, and applications for the Summer 08 Session are due by 10pm EST April 2nd (it’s a short app — fill it out!).

I think that applying to YC has been the best decision of my life. A quick word on value: 6% might seem like a lot to give up, as early stage founders, I believe you need to optimize towards your company’s success – not your personal wealth. If YC can improve a startup’s meager chances for greatness by a few percentage points, it’s well worth it. YC’s founder Paul Graham goes into more detail, but in short: I’d rather own 94% of a watermelon than 100% of a grape.

So let me tell you about my unique watermelon…

Things we Did Right:

1. We applied to YCombinator and dove in with both feet. This is the easiest thing (in terms of effort), but boldness is a rare commodity. I’ve been damn impressed with the other YC founders, but they aren’t that much better than many of the great coders I’ve worked with. They’re just bolder.

2. We were different. In a sea of startups that look the same, we stood out. This can prove to be a bit of a liability (see the “Things we Did Wrong” list), but it’s great for social media engagement. No one wants to talk about “me too” startups that clone someone big.

1. We focused entirely on product/market fit. In the frenzy for viral loops and SEO, we quietly chugged away on building something that people LOVED and WANTED TO TALK ABOUT. With that, we’ve seen 7% week over week growth, without a formal viral loop and with no real SEO. Just plain ol’ word of mouth (which is how Google won, by the way). The good news is that we’ve got some great data to indicate that people really want some of the viral/SEO features we have in the pipeline.

4. We didn’t get distracted. It’s easy to focus on salability, hiring, office space, marketing, SEO, funding, etc. All of that stuff gets incredibly easy when you have great product/market fit.

5. We launched. I think we were the first YC company in our session to launch. Our product now is pretty polished and has a nice long (and accelerating) growth curve… Which nips the, “Does anyone want this?” question in the bud. Launching is an admission that your users are smarter about what they want/need than you are. Or at very least, it’s an admission that you have a lot to learn about your users. Dive in!

Things we Did Wrong:

1. We were different (I know, I know– this was in the “Things We Did Right” list!). We were lucky that we had the traction that we did when we talked to investors– it’s resulted in a lot of interest. Without traction/growth I think we would’ve been dead in the water in terms of investment. Most investors chase investment trends (despite the fact that companies like Google and YouTube were lousy looking markets when the early investors got to ‘em). Nowadays, widget companies are hot. Ad networks are hot. Facebook apps are hot. If you’re playing in those markets, you can build on the frenzy. If you aren’t, you have a bit more explaining to do to investors.

1. When talking about RescueTime, we didn’t focus on the BIG play. This doesn’t mean we weren’t thinking about it! Investors care more about how/why you are going to get monstrously big than how you’re going build a solid sustainable business. Because we are a bit of a unique animal, we invested a lot of time making sure that people understood what we were doing and why people liked it. We should’ve invested more time describing how we knew it was a huge and underserved market (it is!). Read Fred Wilson’s “Rule of Thirds” — if you can’t tell a story how you’re going to be in that top third, you need to rewrite your story.

3. We didn’t spend enough time on marketing — or talking about why this product was going to market itself. The most common question neophyte entrepreneurs ask is, “Now that I’ve built it, how do I market it?” If you’re asking that question, I think you need to go back to the drawing board. In low-cost / high-distribution markets that we’re all playing in, you need some combination of SEO-fu, viral loops, and tremendous word of mouth. Alternatively, if you actually have a product that you’re SELLING, you need to have some proof that you can bring in buyers without a sales force… Unless you’re building big/ugly Enterprise software for Fortune 500 companies. If you are…. I don’t envy you.

4. We didn’t talk to investors much before demo day. In a way, this is actually GOOD– investors kill productivity, and not talking to them much allowed us to focus on our product more. That being said, we have noticed some common misunderstandings about our pitch in our piles of investor meetings… We would’ve had a better pitch if we’d tested it a few times before Demo Day (to investors or a similarly critical audience).

Tony Wright is currently the CEO of RescueTime, which he launched in November 2007 via the incubator YCombinator. Earlier, Tony founded a web startup in the recruiting space that was acquired by Jobster in 2006. He also previously build and sold a “15ish-person” web development consultancy. Tony holds a B.S. in Psychology from Washington College. Read more from him at his company blog.

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Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

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Tags: Facebook. YouTube, Fred Wilson, google, Jobster, Paul Graham, RescueTime, YCombinator