"foreign [Music] I'm Aaron Epstein I'm a group partner here at Y combinator and in this video we're going to be talking about business models and pricing there's three main things that we're going to c..."

"business models that build winners if you're not familiar a business model is a fancy term for how you make money and it turns out the business models are important because we see Founders that often ..."

"business model guide that I've put together that's going to be linked in the description down below this guide is going to cover the metrics that matter most for each business model key takeaways for ..."

"are these are the top 100 YC companies organized by business model and there's some interesting things that we see here first is that that SAS businesses actually make up 31 of the top 100 YC companie..."

"can get from these 10 companies too and here they are these are the top 10 YC companies by value there's Airbnb there's stripe there's instacart there's coinbase there's doordash there's Reddit there'..."

"Airbnb if you are looking to rent out a place short term to stay then chances are you would go to Airbnb because that's where all the inventory is similarly if you wanted to buy or sell nfts you would..."

"easy to take your cut on the opposite extreme if you are an affiliate business multiple things have to happen before you ultimately get paid which means that you are very far from the transaction whic..."

"Winners and this may be surprising because we're so familiar with so many companies that have built their business off of an advertising business model there's Google there's Facebook there's Twitter ..."

"so what are some overall lessons that we can take away from this list first it's interesting to look at what's not in the top 100 list there are no services or Consulting businesses there and so it ca..."

"see in this list either that's because they tend to have a lot of platform risk if your business is built on top of another big successful platform and your business starts to work then it's actually ..."

"then you can't scale a leaky bucket if you have lots of churn and to give you an example of that if you had 95 monthly retention for your recurring Revenue product so that means that five percent of y..."

"user increases the value and they become the dominant player in the market there's also lock-in and high switching costs we see this with transactional businesses like stripe if you're the primary way..."

"way more of the market so to recap the best businesses generate recurring Revenue have high retention build defensible moats are as close to the transaction as possible they scale with software not pe..."

"should be new and copying your business model from one of these proven winners all right now let's talk about pricing it's important to think of pricing as a tool to help you learn faster it can help ..."

"your business the first is are your users even willing to pay or not this is often binary where either they're willing to open their wallet or they don't even see enough value in your product to overc..."

"value into their product so where should you begin the first thing that I recommend is that you don't overthink it if you look online there are tons of charts and graphs and formulas and all these dif..."

"time to maximize that the next Insight is that you should price on value not on cost and so there's three important components here the first is the cost this is what it costs you to be able to serve ..."

"more of that perceived value and now if your cost is higher than your price well that means that you're going to have negative margins and you cannot scale a business with negative margins similarly i..."

"help them make more money this is something every company wants or they might tell you that they were hoping that you could help reduce costs maybe your product saves them time or money they might als..."

"you're leaving a lot of money on the table which brings me to my third Insight which is that most startups are actually under charging you almost certainly are and lower prices are not a sustainable A..."

"and you want to double your Revenue well it sounds pretty difficult to spend all the time energy and money to go get a thousand more customers however if you're able to just double your price just cha..."

"down the road it's also really important to remember that pricing isn't permanent this is another common fear that we see from Founders where they're afraid that they have to nail their pricing the fi..."

"pay it if you have a sticky product Netflix is a great example of this this chart actually shows price increases that Netflix has made over the last seven or so years and it's really interesting to se..."

"paying them and so I'll leave you with this story of segment which helps companies capture and use their customer data when they started out they were a couple of Engineers that were not used to payin..."

"wrap up the five key pricing insights the first is you should charge next is you should price on value not on cost the third is most startups are under charging and you probably are too the fourth is ..."