Case Study: YC's Hazel Tackles GovTech

Hazel's co-founders, August Chen and Elton Lossner, previously worked at Palantir and Boston Consulting Group, where they witnessed how inefficient procurement processes could fuel California wildfires and waste billions. This firsthand experience shaped their focus on fixing the U.S. government purchasing lifecycle, a market valued at over $2 trillion annually for state and local contracts alone. The startup's strategy hinges on identifying the "desperate buyer," a core principle for early-stage ventures. Desperate customers have an urgent, painful problem with no other viable solution, making them willing to take a risk on an unproven product. For Hazel, this meant targeting overworked civil servants managing procurement with outdated tools like Microsoft Office and facing immense compliance burdens. YC Partner Michael Seibel advises that a founder's first 10 customers should come from their personal network and be people who feel the problem so acutely they are willing to use an MVP. Similarly, the founders of YC alum Brex acquired their first 10 customers by directly recruiting from their own YC batch, offering a very simple initial product to solve a shared, immediate need. When going beyond your immediate network, a systematic outreach process is crucial. For government outreach, research is key; use LinkedIn and public records to find the specific official whose responsibilities align with the problem you solve. The initial cold call or email's primary goal is not to sell, but simply to schedule a follow-up discovery meeting. YC Partner Gustaf Alströmer stresses that in early user interviews, your role is to listen, not to talk about your solution, which can bias the conversation. Ask open-ended questions to understand their problems deeply. Aim for a consistent pipeline of these conversations—targeting 15-20 meaningful discussions over a six-week period can turn random chats into measurable progress. Charging for your product from the start is another critical YC-backed tactic. YC General Partner Ankit Gupta notes that paying customers provide sharper, more honest feedback than free users. This early validation from someone willing to pay is a strong signal that you are solving a real and valuable problem.