OpenPhone is now a major player in business communications, offering a modern phone system with powerful calling, messaging, and CRM features. But before its widespread recognition, it was a startup with a clear vision. Its acceptance into the prestigious Y Combinator accelerator's Summer 2018 batch was a pivotal moment, shaping its future growth. The company was founded in 2018 by Mahyar Raissi and Daryna Kulya to solve a problem they witnessed firsthand: small business owners using their personal numbers for work. This core insight, born from observing contractors, laid the groundwork for a transformative company.

This article dissects the very application that opened the doors to YC for OpenPhone, offering a blueprint for founders aiming to follow in their footsteps.

The YC Application

The following is the original, unchanged application submitted by OpenPhone.

Company

If you have a demo, what's the url? Demo can be anything that shows us how the product works. Usually that's a video or screen recording.

https://itunes.apple.com/us/app/openphone/id1241817309?ls=1&mt=8

Describe what your company does in 50 characters or less.

Phone system meets CRM built for small businesses

What is your company going to make? Please describe your product and what it does or will do.

OpenPhone is a phone system equipped with CRM capabilities, built from the ground up to fit the needs of small businesses.

Through our mobile application, small business owners get a simple yet powerful business phone system with a dedicated phone number on top of their existing mobile devices.

We are not just another phone system though. We start by owning the communication channel and then use that data to help small businesses communicate better and earn more money.

Some of the values our product will offer are:

• Giving businesses full control over their phone system right from their mobile devices (personalized voicemail, greeting, business hours, etc)

• Enriching their texting experience with other interactions such as appointment scheduling, sending/requesting docs/signatures/payments and more

• Allowing them to share the responsibility of their business phone with their colleagues or partners

• Integrating with their existing systems to bring all communications and customer data to one place

• Helping them manage their relationships and close more deals

Where do you live now, and where would the company be based after YC?

Kitchener, Canada/San Francisco USA

Founders

Please enter the url of a 1 minute unlisted (not private) YouTube video introducing the founder(s). This video is an important part of the application. (Follow the Video Guidelines.)

(Video link was provided in the application)

Please tell us about an interesting project, preferably outside of class or work, that two or more of you created together. Include urls if possible.

A while ago, we did a fun little project together called Milkshake. Using the app, users could express what they were up to at anytime by using up to 3 emojis, their location, and optionally an image.

Our assumption was that the barrier to post a good picture on Instagram or tweet something interesting was too high and most people didn’t create content on those platforms often enough.

Maybe if people were constrained to 3 emojis and their location to express what they were up to, they would not feel too much pressure to post content.

During the prototyping phase, we learned that although creating content was easier, the generated content was not interesting enough for users to scroll through every day.

No working demo anymore but here’s one of the designs! https://imgur.com/a/u2jw0

How long have the founders known one another and how did you meet? Have any of the founders not met in person?

Known each other for two years and met through a common friend during a trip.

Category

Which category best applies to your company?

B2B

Is this application in response to a YC RFS?

Yes

If yes, which one?

Enterprise Software

Progress

How far along are you?

In January 2018 we released the app up to the public. Since then we grew to 1,500 users.

We added a paid tier 2 weeks ago and are focused on converting our free users to paying customers while continuing to grow our user base.

Which of the following best describes your progress?

Launched

How many active users or customers do you have? If you have some particularly valuable customers, who are they? If you're building hardware, how many units have you shipped?

We now have 1,500 users and growing at 200% MoM.

Do you have revenue?

Yes

We're interested in your revenue over the last several months. (Not cumulative and not GMV).

1 month ago: 320 2 months ago: 20 3 months ago: 20 4 months ago: 30 5 months ago: 0 6 months ago: 0

Anything else you would like us to know regarding your revenue or growth rate?

We started the app free while in private beta. Mainly to double down on product experience and making sure we are creating value for users.

We introduced billing 2 weeks ago and gave all existing users at least 30 days of free trial and 32 of them have already started paying and we expect many more once we get closer to the end of existing trials.

If you are applying with the same idea as a previous batch, did anything change? If you applied with a different idea, why did you pivot and what did you learn from the last idea?

• Launched and grew the product to 1,500 users.

• Started getting paying customers (32 people).

• Went from a three-tier pricing model to a simple $10/month plan.

• Launched billing in the app and improved our funnel conversions.

• Matured our thoughts about our distribution strategy.

• Launched new features to delight users.

If you have already participated or committed to participate in an incubator, "accelerator" or "pre-accelerator" program, please tell us about it.

We are a part of Waterloo Velocity Garage and have been here since Sept 25th 2017.

Idea

Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you're making?

Before starting OpenPhone, I was building mobile products for over half a million trade contractors at Joist.com. I observed that contractors who looked more professional, followed up with their customers, and were more organized, earned noticeably more money.

I also noticed that almost all of them used their personal phone number for business and hated doing so. For them that meant:

• Giving out their personal number to strangers

• Not knowing when a call is personal or for business

• No way to share a business phone with partners or colleagues

• Phone constantly ringing off-hours

• All personal and business interactions mixed up and impossible to search for

This problem impacts almost all small business owners and a quick analysis of search volume shows that 2 million people search for small business phone systems every month just in North America so people are already looking for a solution.

We are the right team to go after this problem. Daryna has a lot of experience building communication products for businesses. She launched and grew Vidyard GoVideo to 200k+ users.

We both love building products that simplify complex workflows and make technologies that are inaccessible or hard to use, simple and accessible to everyone.

What's new about what you're making? What substitutes do people resort to because it doesn't exist yet (or they don't know about it)?

At OpenPhone, we are bridging the gap between a phone system and a CRM.

A lot of small business owners rely on a phone system to communicate with their customers. Right now, 86% of them are using their personal phone numbers for business which is both limiting and problematic on so many levels.

Majority of small businesses don’t use a CRM because existing solutions put the burden of data entry on the user. Who’s got time for that?

We change that by owning the communication channel between businesses and their customers. This means that we can help small businesses stay on top of their customer relationships and ultimately close more deals.

Who are your competitors, and who might become competitors? Who do you fear most?

There are traditional cloud phone systems that have captured 14% of the market. Google Voice, Sideline, Grasshopper, Phone.com to name a few.

These solutions are outdated, not maintained or barely updated, and compete on phone system features and pricing. They do offer a second phone line for business but outside of that, they are not solving enough problems.More modern phone systems like Dialpad are focused on larger businesses with different needs.

Communication products that offer CRM-like capabilities like Front, Intercom, Drift, and so on are primarily focused on email and live chat as their core channels. For our target market, live chat is not a channel they use and they are happy with Gmail as their email client.

Products like Facebook, WhatsApp, Telegram and iMessage are offering their own business solutions and what they are doing is fragmenting the communication space even more and forcing small businesses to be active on many channels. This gives us the opportunity to integrate with all these channels and create a unified place for all business communications.

None of the existing players we named here can simply add a phone system or CRM to their product to compete with us.

Building a phone system first CRM is not an afterthought, it impacts every decision in the product.

I think our biggest competitor is some unknown startup building towards the same vision as us somewhere in the world right now.

What do you understand about your business that other companies in it just don't get?

Instead of focusing on being the best and most comprehensive phone system in the world, our goal is to build a product that helps small businesses communicate more effectively, save time and earn more money.

We believe the product that will achieve this vision will be a fusion between a phone system and a CRM with integrations to further enrich the product as needed.

The best CRM for small businesses will look nothing like Salesforce.

How do or will you make money? How much could you make?

We are a subscription-based product with plans starting at $10/month. As the product grows, we will introduce higher-tier plans. We believe our product at its maturity can be priced anywhere from $50-$200 per month.

There are 33 million small businesses in North America alone and at an average of $100/month per user we have a total addressable market of $40B annually.

How will you get users? If your idea is the type that faces a chicken-and-egg problem in the sense that it won't be attractive to users till it has a lot of users (e.g. a marketplace, a dating site, an ad network), how will you overcome that?

There are 2 million people searching for small business phone systems every month on Google just in North America. So we want to spend money on AdWords initially as an acquisition source.

Our initial target customers are people at the bottom of the decision making funnel, those searching for solutions on Google, AppStore, Play Store, etc.

We will take the learnings from the kinds of users who sign up through these channels to create targeted FB and Twitter ads to capture people higher up that funnel.

We will also focus strongly on organic growth through referral programs, SEO and ASO.

Others

Please tell us something surprising or amusing that one of you has discovered.

Last year, we discovered that when we get a video interview with YC and the web page says “Wait until Adora connects” for longer than 3 hours, it probably means our connection dropped and the video interview is not happening. ?

Curious

What convinced you to apply to Y Combinator? Did someone encourage you to apply?

We want to be a part of a fast-paced program with big hairy audacious goals, surrounded by people who are building the future. We want to learn how to scale the product and user base from those who have done it before.

Looking at YC Alum Front that offers a similar product for a different audience, we believe OpenPhone can go through the same growth trajectory by joining YC.

Beyond being an accelerator, YC is a mindset and a set of values we believe in.

Daryna witnessed this at Vidyard where YC made a long-term impact. Many years later, the company has maintained YC values and principles. Being relentlessly resourceful and making something people want are some of them.

How did you hear about Y Combinator?

Yellow Pages

General Advice

• Be concise. One to two sentences is often enough.

• Lead with the TL;DR. For longer answers, make your first sentence a summary of the entire point.

• Optimize for clarity. The reviewer shouldn't have to reread a sentence or look up jargon. Write simply.

• Kill the marketing-speak. Use direct, plain language.

• Assume zero domain knowledge. Explain your concepts as if you're talking to a smart friend from a different industry.

• Make each answer stand-alone. Reviewers might skip around. Ensure each response makes sense without relying on others.

• Be honest. YC funds companies at all stages. Exaggeration isn't necessary and can backfire.

• Focus on your business, not the application. Your time is better spent improving your company. Write the application, then get back to work.

Quick Takeaways

• Clarity is King: OpenPhone's application is incredibly easy to read. They avoid jargon and get straight to the point.

• Problem First, Solution Second: They clearly articulate the pain point of using a personal number for business before diving into their product.

• Data-Driven Insights: Mentioning the "2 million people" searching for their solution shows they've validated the market's demand.

• Strong Founder-Market Fit: The founders' past experiences directly relate to the problem they are solving, which builds credibility.

• Early Traction Matters: Showing growth to 1,500 users and early revenue, even if small, demonstrates momentum.

• Vision Beyond the Product: They aren't just building a phone system; they are creating a new category of "phone system first CRM."

• Humor and Personality: The anecdote about the dropped YC interview call shows a human side that is memorable.

Next Steps for Your Application

Don't just read this application. Deconstruct it. Notice how every answer is direct and packed with substance. Your goal is not to copy their answers but to replicate their clarity and strategic thinking.

Start by defining the core problem you solve in a single, powerful sentence. Then, gather your data. What metrics prove people want what you're building? Finally, tell your story. Why are you the right person to build this company? Answer these questions with the same directness as OpenPhone, and you'll be on the right track.

Frequently Asked Questions

1. How important is it to have revenue before applying to YC?

While not a strict requirement, the OpenPhone application shows that even small amounts of early revenue can be a powerful signal. It demonstrates that you've built something people are willing to pay for.

2. What if my co-founders and I haven't known each other for a long time?

OpenPhone's founders had known each other for two years. The key is to demonstrate a strong working relationship. Highlighting a project you've built together, as they did with "Milkshake," can be more impactful than the duration of your acquaintance.

3. How much detail should I provide about my competitors?

Be thorough but concise. OpenPhone's response shows a deep understanding of the competitive landscape, from traditional players to potential future threats. Acknowledging your competitors and clearly articulating your unique value proposition is critical.

4. Is it okay to have a bit of personality in the application?

Absolutely. The "surprising or amusing" discovery is a great example of how to inject personality. It makes your application more memorable and shows that you're real people, not just a business plan.

5. How polished does my product demo need to be?

Your demo should effectively communicate how your product works and solves the stated problem. It doesn't need to be a Hollywood production. A simple screen recording that clearly shows the user experience can be very effective.