Valley of Broken Dreams: A YC Postmortem
warren.igsig.org
warren.igsig.org
Basically, we did everything we could on our end:
-Had a pretty good demo. We spent a few months working on it part-time and we had the entire thing up and running with enough features for it to be roughly usable and we had some nice mock-ups of the future stuff we wanted to put in. I even showed them that TechCrunch featured one of the UI components (that was released as a standalone widget) done by our UI guy.
-we prepared very well. We met with a few people from the local startup community (organizers of DemoCamp, a CEO and CTO of a local startup, etc) and had them pick apart our pitch. They did a very good job and brought up a lot of concerns which we worked out. People I emailed beforehand said to expect a lot of questions at the interview and to think on your feet, but because we had already gone through this 3 times with the local people, none of the questions during the interview were new to us and we had decent answers.
So why didn't we get accepted? Well, there were simply better teams around that day. The email from pg did give two reasons, but to be honest, they were pretty flaky. The first was the community aspect (ie, it depended on user generated content) and the second our planned revenue stream. We had good answers to these ready since we expected they'd be raised during the interview and plenty of previous YC startups had overcome the same problems. The way I see it, if pg's philosophy is "build something nice people want to use, then worry about the money" and he rejects you because of revenue concerns, then it's basically a nice way of saying "Sorry, I just liked the other teams better"
Of course this illustrates a one of the downsides of the whole startup thing. A lot of the things you do in life are pretty deterministic: if you spend 1hr/day learning Spanish, you'll know it well sooner or later, if you spend 1hr/day working out, you'll increase your stamina or muscles or whatever you're working on. If you work 1hr/day on a startup up.. well, its probabilistic, so all you're doing is tilting the odds in your favour, but you're never guaranteed anything - be it progress or success or whatever. So all the work on the app and all of the preparation for the demo/interview was for naught.
Anyway... it'd be a shame to throw so much work away, so we'll probably work on it a bit more, then release it as a side project or something. At least have a decent project to put on future resumes or whatever.
We certainly do not blame Paul Graham for our setbacks. Our motto had always been, "you win some, and you lose some." We won some when we received an invitation to Mountain View. We lost some when we received a rejection e-mail from PG afterwards. But then, we won some more, when we decided to take the free advice offered by PG (think bona fide corporate consulting) and go ahead with our startup idea anyways. Thanks to YCombinator, we have learned a lot from our trip to Cali and our first presentation to VC's, that we are going to take away and put to use,
- The Silicon Valley is just a place. Coming from a sleepy college town on the East Coast, we relished the idea of coming to the tech mecca where everything came together. But driving down San Jose/Pal Alto on $4/gallon reminded me of the suburban sprawl/commercial park/new development of Washington D.C/Boston/Philly; riding the $12/one way VTA light rail and BART and witnessing scores of IT workers getting off at Cisco Way reminded me of the scenes of my arriving for work at BigCo, back in Connecticut. But I was reminded that unlike those around me, I didn't have a ID badge, all I had was my idea and the thrill of following through or failing with my idea. Being Silicon Valley did not dazzle me with its "glitz," but my idea was still exciting to me.
- Doing startup's sucks, in the "conventional sense". As a college student, you can't help but compare yourself with your peers; I secretly maintained a secretive competitive streak with my friends, who will be going to med school/law school/wall street firms. While I have been outwardly conceding that they will be obscenely rich soon in comparison to my "poor" startup-wanabe self, I was hoping that getting accepted into YCombinator would put me ahead of my lame corporate-sellout friends. As an result, I poured a lot of time in writing the application and preparing our presentation. Now that we have been rejected, I relish of having the opportunity to once again, sit in my school's computer lab - late at night, coding away.
- How little rejections matter. We were heartbroken when we initially read the e-mail from PG on Saturday evening. But the next day when we woke up, I and my partner went our respective way's for more startup job interview's we had lined up for our trip to California. On our flight back home, we discussed how we could address on our own, the valid concerns that PG had brought up regarding our startup. When we got back to Connecticut, I fired off a e-mail to my mentor for Google Summer of Code (GSoC) that my plans for VC funding fell through, and that I will be able to work on my GSoC project full time during the summer (Any GSoC people here?). During the course of my writing this, my partner in crime caught up with me in the computer lab and showed me some of his plans for the back-end of next iteration for our startup website.
I've just realized how lucky I am, and how much the trip to Mountain View was worth all the time and troubles I went through.
YC gives -
1. Advice/guidance
2. A little money
3. Networking Opportunities
4. A high pressure environment to get the best out - quick.
Except for #3, we have substitutes for all others. And #3 is picking up too.
So I say, "Go be your on YC!"
http://gigaom.com/2008/04/11/to-yc-or-to-vc-that-is-my-quest...
As YC grows it's invevitable that they, like every investment group, are going to pass on something big, and I think the good folks running YC would be the first to admit that.
Working at a normal company, doing a more or less normal job is more along the bell curve - you can make pretty good money as a top software guy somewhere, but (options aside), you're never going to get that lucky break and make zillions. On the other hand, you might well make more than the startup guy, if he spends a year working on his own thing, 'for free', and then fails.
(See: The Black Swan)
Here's the last paragraph:
Anyway... it'd be a shame to throw so much work away, so we'll probably work on it a bit more, then release it as a side project or something. At least have a decent project to put on future resumes or whatever.
Translation: "Because one VC firm rejected us, I...suppose...I can still use the incipient startup as resume filler. Or whatever""
That's a loser attitude if there ever was one, and I'm going to guess that VCs look for it.
I'd imagine VCs look for it too, but it's important to remember that what people say and what they do often have no correlation, and it works both ways. There're some folks that are all "rah, rah, we're going to take over the world" and then they crumble at the first difficulty. Then there are others that are "well, maybe it'll work and maybe it won't, but if it doesn't it'll look great on a resume, so I think I might give it a try, at least for now", then they keep at it for 8 years and exit for millions of dollars.
I'm reminded of James Hong's "Happiness = Reality - Expectations, so I do my best to keep expectations low" post. Everybody chided him for being so blase and said that if he expected to fail, of course he would. But if you look at what James has actually done, it's clear that he hasn't failed, he just keeps his expectations low as a trick to stay motivated.
For example, you can take a rejection from YC and say "Gee, we got this far, there's something to this idea, we should definitely keep working on it" and you'd be right. But you can also say "Gee, we couldn't get into with YC their (relatively) lower standards, how are we ever gonna impress an Angel/VC?" and you'll also be correct.
So I'm just trying to be honest here. YC would have provided a great vote of confidence needed to put in a monumental effort into this (ie, quit jobs, take huge financial risk etc). Now we'll keep working on it and put it out, and maybe that vote of confidence will come in the form of enough users and growth to convince us to really get into this. Or maybe we've been wrong all along, all the criticisms correct and the thing will fizzle out.
But mindless hyperbole of the "we'll keep going no matter what and change the world" does little but stroke your ego, which I personally hate.
I would argue that YC standards are, and can be, higher. They see a lot more companies each year than most VCs. They can't see as much of the potential of the founders because it is so early in the process...but they have a lot more to choose from, so they're able to pick the ones that seem about to explode from excitement about their business and seem smart enough and dedicated enough to deliver it.
pg has said that investors (including him) invest in businesses that are like a train leaving the station, whether the investor is on-board or not. Investors hate to miss a success, even more than they hate to bet on a failure, so if you aren't convinced of your own success with or without one particular investor, you aren't what they are looking for. It seems to me that you probably weren't convincing on this point.
One of the main tips and a reason we didn't get in is that if PG and co suggest some kind of change to you, you should agree with whatever they say. One thing they're testing for is flexibility. Don't waste time defending yourself against them because you can't win.
Whatever they told you, think about it, run with it, and reapply in 5 months. If you can actually make progress towards solving online dating they'll accept you in a heartbeat. If YC was a VC that had a model for the types of companies they were going to invest in, online dating would be at the very top of the list.
It's a mental thing. If you always keep the dream of YC on a golden pedestal in your mind (one that must be reached in order to be successful), you could be setting yourself up for further disappointment and wasting valuable time. I'm not saying that YC is not worth aspiring for (I still think its a tremendous opportunity), just that dwelling on it rather than your product will kill you.
5 months is a long time in startup world. You need to put your defeat behind you as quickly as possible and focus on building your product. Remember, that is what is really the most important.
Hopefully you learned some useful things about your idea and team from your interview. We certainly did, and for that I'm thankful. Its a little disappointing to hear that they no longer talk things over with you on the phone, but at least you got to meet some smart people and got some critical advice during the interview.
The big advantage of applying isn't so much that you'll get in (I've kinda given up hope of that happening unless a buyout is imminent, a la Fleaflicker, and at that point we wouldn't need them). It's that it gives you a regular point to check your progress and see how what you've done stacks up against what you said you'd do. My experience - with 3 consecutive application cycles - is that we're basically doing exactly what we said we'd do in the first application, just 60-80% slower than we anticipated. That's very useful data when we're planning future milestones.
It also gives you a chance to revisit your assumptions and make any necessary course corrections. For example, we had a founding-team issue that PG brought to our attention with the first application that we corrected between app 1 and app 2. Several of the competitors we were initially afraid of have not materialized. The market as a whole does not seem to be developing as quickly as we thought it would, though it does seem to be developing. That's very useful data when we're trying to budget finances and decide whether it's time to go for outside funding. We have the excuse to take another close look at our competitors and see what they're doing wrong and what they're doing right.
It's easy to go full steam ahead on coding and then miss fundamental changes in the environment that render all your coding useless. 6 months is just about the right period of time to revisit your assumptions and see if it's still worth doing. You should be doing this anyway as a business, but YC gives you an excuse and a deadline.
Its almost as if YC could foresee this would happen with certain groups and it turns out true. Why does it seem all groups who are funded by YC continue to build something and all who are not, dont? I am exaggerating about the sharpness of that division but not by much.
It might often be because the idea is so early stage that it is easy for the founders to get derailed before following through with its execution. It might also be viewing YC as a requirement to be successful rather than one option.
You alone decide if you are willing to work until you bleed in order to build something great. So dont waste too much time thinking about things which could get in the way. I would really to see more founders pick themselves up after rejection and go on to release something stellar.
Filling out the YC form, eding it over and over again, getting excited, waiting for decisions on who they are going to interview, then the let down of not getting to the interview stage is too much for me, a nearly paralyzing distraction to serious endeavors.
A lot of people disagree with things we suggest and we fund them anyway. What we care about in this situation is how they respond. Plain yes is as bad a sign as plain no.
Fifty years from now will you remember that day spent coding, or will you remember your adventure in California?
if you have any savings go and travel the world. if you don't, work for a year, and then do it. my guess would be that 3 months from now you'll be laughing at yourself.
good luck.
getting laid with online dating ?
I would guess the majority are just looking for random sexual hookups. Some sort of eHarmony matching for sexual partners would probably be an overwhelming success.
for sex the problem is the same as in "real" life, women can choose so i doubt its just hooking up over the internets to get laid...
if guess its 10 to 1 or worse men to women wanting to get laid...
and that 1/10 is not jessica alba.
Given any sort of relationship definition, I would guess that is never far off 1:1 for women and men interested.
And not all men are interested in finding Jessica Alba...she is obviously attractive but that is only a piece of the puzzle :)
What I was trying to say was the number of women in general who participate in something like one night stands or a purely sexual relationship MUST be closer to 1:1 than 10:1 or 100:1.
Hence, there is great opportunity in putting together both sides of the equation, online sites by your numbers need to somehow draw the attention of women who they are clearly neglecting to serve well.
Yes, that is a problem for us too. We'd like to be able to spend longer with each group. But we want to give the maximum number of groups a chance to interview. If we spent more time on each interview, we'd have to interview fewer groups.
Somebody needs to implement a Questions Requiring Thought (QRT) system. There should be a way to note questions during the interview that would require a lot of thought before a smart answer could be given concisely. Interviewees would leave the interview, put their thoughts together, and make a concise video of their answer. YC could review these answers anytime. I bet for 1.2x the time they're spending now, YC could get 2x the information.
Of course, this would depend on the availability of YC alumni. I know I'd sign up to do it -- if I were a YC alumnus, that is -- but the fact that I spend several hours per week acting as an alumni representative on my alma mater's university senate (and committees thereof) marks me as being unusually prone to volunteer for such things.
You really need to follow through with your ideas whether or not other people believe after they heard your pitch for 10 minutes.
YC is indeed a great opportunity, but it's definitely not the only one. Keep working at your idea, go out to conferences and meet-ups -- you can network on your own. Be yourself and be your product.
I believe something that is important to YC is that you are not banking on their funding to fulfill your idea. You need to have the mentality that you are going to finish your product with or without them. You need to make them want to get on your boat rather than you praying to be on theirs.
We came across the application and decided to fill out as an exercise for solidifying our idea. Whether or not YC was going to fund us, we still had a plan of action, which is essentially still the same. I feel that our mentality is what gave us the confidence to interview the way we did.
Try again next time, don't be so bitter. Give value before you get value. If you make your product and it is good, word will spread, and you will succeed, just keep at it. Please.
I would not invest in founders that aren't passionate about what they are doing.
Find something that makes you excited.
Everyone's always saying there's a need for more startup investors who were formerly startup founders themselves. Checking your profile on Fleaflicker, I see you're in NYC; there are bound to be angel investor groups that you could join if you didn't want to do it alone.
(and eventual success)
I doubt I said that. In fact I used the wretchedness of existing dating sites as an example of an opportunity for startups in a couple early essays on startups.
First is supply -- just having lots of available people on there. It's a classic network that derives its value from the connections. So you could break down barriers like cost (plenty of fish) or complexity in getting a profile up.
Second is quality. This is where barriers are important -- Christian dating becomes a prefilter that reduces the population but increases quality. eharmony.com actually actively tries to increase quality by returning NO matches for people who 'fail' their personality tests. As controversial as that is (e.g. if a user is a depressed Atheist, then they probably will get 0 matches) -- it serves the community by making the dating pool better for their targeted audience.
The two existing ways in which sites attack these problems is that they specialize for a specific niche and make it awesome for a particular type of person, or just go for pure quantity (which makes sense for an adwords play).
Are there others?