The reason for rejection was same at both times - I didn't have a clear strategy of how to grow my company into a big business. (For those that don't know, YC gives you a pretty clear explanation of why they rejected you and what they want you to do better.)
We make products that our users absolutely love and have seen phenomenal growth, and YC understands that. But it seems like it's very important to them that you are able to clearly articulate what your business will look like in ten years when it's a billion dollar company.
I have no doubt that I will make my company into a billion dollar business. But I simply don't know how I will take over the world yet. I strategize what needs to be done over the next 1 year and focus only on that. Sure, it might not be a trait for successful founders, but I firmly believe that staying focused on building great products is key to my business. The vision for how I will turn this into a billion dollar company will gradually come with time.
If you like a thinner sock, these are the best I've tried.
In life in general the "talk a good game" part plays particular significance in people's decision making even if what is being said doesn't hold water. Of course if your idea is super special in some way or you have some other huge advantage that gets peoples attention that doesn't matter but that covers edge cases, not normals.
That's a bit of a simplification and exaggeration, but the general idea is that if you want to raise money in SV you need a plausible case for how your startup will either become a unicorn (>= $1B valuation) or disrupt some really big established thing. YC also has appears to have a preference for technological advances - "breakthrough technology" - over the status quo.
Looking at your website I would have the same question as YC - competent-looking execution and product design, which if continued could potentially make it to >= $1B market cap, but it appears your business model is, at best, attempting an incremental improvement over UnderArmor and the like. What big problem are you solving, or big established things are you disrupting? What new market or industry are you creating? What breakthrough technology are you deploying that enables you to execute better than entrenched competitors in a way they can't easily replicate?
My sense is that's more along the lines of what they're looking for.
I don't see my business as solving any real problems. But I believe you don't need to solve real problems to have a business. I can very well frame my business as one that solves a problem, but that would be marketing speak rather than reality. There are billion dollar companies that don't solve problems and that's esp. true in the apparel industry.
I'm not going to delve any further into my thinking of the 'problem solving' approach because there is a more important point that was possibly misunderstood in my original comment. A lot of the responses to my comment are based around the merits of the idea itself, but YC has been pretty clear that they fund people over ideas. The way I look at it, the idea is just a medium for them to get to know the founder(s). There is no such thing as a 'billion dollar idea'. Most billion dollar businesses did not become that way over a short period of time [1], esp. not in the apparel industry. Every company started with something small and what you do in your initial years is just the stepping stone of creating opportunities to become something bigger.
But back to the point - I believe YC uses your idea to understand the founder, and my point was that one of the traits they look for is the founders ability to clearly articulate what their business will look like in ten years. The emphasis here is on the founder's characteristics rather than the merit of the idea itself. So, while I agree with your thought process on what a VC looks for, I disagree that YC looks for the same thing. That's why they are an incubator rather than a VC firm.
On a less related note: I don't apply to YC for the sake of raising funding. My company generates enough revenues, and we have enough positive cash flow and great credit terms with vendors. The value addition I seek from YC is more to do with better figuring out the business rather than access to capital. The reason YC is the only investor I talk to is a very personal one: My company would not exist without HN. I don't have a background in engineering, but since I started reading HN 5 years ago, I really resonated with the community (although I never participated). Back in those days, there used to be more front page articles about startups and the community seemed more tight-knit. I started learning how to code through codeacademy and that was the inflection point that gave me the confidence that I can actually build things, which eventually resulted in me building YA. I worked with many YC companies and still do business with some of them. So, the real reason I apply to YC is because I've gotten a ton of value from it's community and naturally want to have a closer association to them and the partners that run the organization. The sad part is that as they grow bigger (which is better for the world), the appeal of being in the insider community gets smaller. I just hope I get to participate in a cycle before that feeling goes away all together.
[1] Companies like Uber & Airbnb are exceptions
https://medium.com/@arbabmazumdar/3-things-i-learnt-while-bo...
https://medium.com/the-crowdfunding-bible/how-i-raised-250-0...
More recently we've been rejected three times with Missive, (https://missiveapp.com), still not financially successful, but starting to receive a pretty good vibe from early users + big potential.
I wrote about how we manage the two projects side by side with a small team of 4. https://medium.com/missive-app/successfully-bootstrapped-a-p...
Everyone is biased towards themselves, but still, I think we're a high quality, high achievers team that should have been accepted. You can now troll :).
We will reapply until we are in or until it doesn't make sense anymore. The value proposition of YC is that good + life is an adventure.
Nice ! Love how the quarters accumulate (reference to your $.25 pricing per badge)
That's an important point. YC is an investor, and they're going to reject otherwise good ideas because they may not fit the YC investment profile and objectives. It's not necessarily a judgment on the business.
If I am an attendee at a conference that uses your software, is the conference required to notify me? If so, do I have any ability to opt out of this?
If you just look at W15 companies how many have a chance of a billion dollar company? Any company becoming a billion dollar company is very very very small.
It would be a stretch to even say it's a common way to launch a startup
While the YC company raised well over $1M, the last available data shows their annual income was $80k, my startup was bootstrapped making well over 6 figures and ultimately I achieved a liquidation event.
Here is the problem: to hire a lawyer, you must discuss your case with a human from the law firm who can evaluate the facts and generate a fee. In other words for a legal fee to be competitive you obviously can't charge the same for a seat belt ticket as a accident with a fatality. But, probably the real truth of the legal industry, especially tickets, is that fees are more often based on what they think a client can and will pay without calling another firm to compare prices.
As far as I can tell this is why the YC company needed to raise funding, so they could hire a staff to evaluate the tickets, act as a middle man between potential client and the lawyer, and then deliver the fee/retain the client. My belief is they are trying to experiment with a single flat fee across a jurisdiction (i.e. $150 for any ticket in California), again a problem because not all cases are the same and such a model is not fair to the client or the lawyer.
What we did was invent a business method to automatically calculate a legal fee for individual cases. Our method allowed clients to calculate their own fees (transparent pricing) and hire a lawyer 24/7 without the need for staff (automation).
Car park fines being one obvious one. Claiming for late train arrivals (seriously)
We're just getting warmed up. We're increasing investment in our agent (for example, we're developing a Windows Powershell version for when Microsoft releases SSH for Windows later this year, so we'll be cross platform.) We're also announcing our first six enterprise customers as soon as we get approval from their legal departments. Some of our new innovations we're still in the process of filing patents on, so can't discuss, but they're awesome :)
We've decided to not take any seed money at all and just self-fund. We've reached 'ramen profitability', as YC recommends, and now we control our own destiny (although we might pursue a growth round later.)
We were rejected in the very first stage (via email) with no reason given. Even if you get rejected: if you believe in your idea, keep going! Success is driven more by determination and persistence than anything else. Something the size of YC is driven by numbers and just one small issue can tip the balance away from you, so by definition they have to pass on a lot of good ideas. Just go for it.
Smartest thing you can do. You have no one to answer to and you can determine your own success.
>> if you believe in your idea, keep going! Success is driven more by determination and persistence than anything else.
This. A thousand times, this.
I've seen so many startups give up because they didn't get their VC money, or get accepted to an accelerator program. I used to tell my partner that you want rejection, you want people to say no to you. This is a numbers game. The more people that tell you "no" means the closer you get to someone saying "yes".
There is a famous story called, "3 feet from Gold" where a man had a mine and worked for years and barely got by with a few gold nuggets here and there. After 3 years, he finally gave up and sold the mine to another miner. The new miner went in and did some geological tests and found out the man was only 3 feet from a huge gold vein. Within months, the new owner was rich beyond his dreams.
The point is, being persistent and not giving up is important because you never know how close you are to hitting that huge vein of gold.
Surely there must be more? Otherwise either their success picking good companies is amazing or the program itself is a huge advantage?
I dismissed it initially as just another business trying to capitalize on the social media frenzy
Since then, they've become a really solid product with a $10M revenue run rate.
More important has been their efforts towards transparency.
Now educating more software engineers than the UC system.
I was rejected by YC in Nov '12 on an idea. I actually applied as a result of the application extension granted due to Hurricane Sandy. A week after applying, I wish I applied with the idea of my current company, MakeSpace.com, which Mark Suster from Upfront Ventures funded less than a week after I received my rejection letter from YC.
I wouldn't change anything because I'm very happy where we are today. But there is hope if you get rejected from YC. What other founders (same or different idea) were rejected from YC but went on to start growing startups?
Strictly speaking, 10Stories isn't a going concern, but TrackMaven Attribution certainly is. We didn't go forward on the acquisition because we ran out of money. Quite the opposite: we had seen enough traction that the acquisition offer from TrackMaven effectively got us through accelerator + seed round. So we decided to skip the 6 months of dancing around and go right to the part where we are hiring a team and getting early users from the TrackMaven customer base.
We're only 1 month in, but this was clearly the faster path to market. Maybe it could have gone as quickly with YC -- who knows?
We're now post-series-A and growing.