When I meet new founders the last question I ask is always:
Have you considered applying to Y Combinator?
While Y Combinator is not for everyone, it made all the difference for me and my company. This is a reflection on my experience partnering with Y Combinator and how it changed our destiny.
We applied to Y Combinator for the summer class of 2012. We didn’t get in. They didn’t invite us to interview.
Few people know that Experiment was initially created by a sole founder, Denny. Denny quickly recruited me. And together we recruited a founding team of six. This was our first mistake.
In our first Y Combinator application we applied with six founders. We recruited four strangers, some of which are now our good friends some of which are not. Starting a company with six founders is generally a bad idea. Starting a company with people you just met is generally an even worse idea. We would learn this lesson the hard way.
This first mistake we made was thinking we could make everyone in the founding team a founder. What I realize now is it is extremely important to be clear about expectations and the level of dedication required to earn the founder title. We weren’t clear about that. Being explicit about this could have made things a lot less painful for all people involved.
A founding team of six was a mistake for us because trust is something that is earned over time. Siblings make exceptional founding teams. Best friends make exceptional founding teams. Knowing what I know now, I would never invest in a company started by two people that just met and I would never start a company with someone I just met. Denny and I are a lot of things, but at the core we are best friends.
Looking back I think there is a case where this could work. Let’s think about why people follow others and why people trust others. Ali from Y Combinator says it well:
Building trust in this way is both a science and an art; it requires both competence and character.
Denny and I were (and probably still are) extremely incompetent, but what we have is an unwavering loyalty to our original idea. We believe so badly that this idea must exist in the world that we’ve never considered pivoting from the original idea. This is our greatest strength and may be our greatest weakness. We have the character, but lacked the competence. At the end of the day our idealism was not enough to keep people on our team. We had a successful launch, but we failed at maintaining the trust of our team.
In most cases a six person founding team would never work. In our case, it was never going to work.
When your team thinks they can do your job better than you, you have a problem. I pitched every investor in Seattle. Everyone said no. I seriously started to question myself and everything around me. This is an extremely dangerous place for an entrepreneur to get stuck in. This is an extremely dangerous place of a young naive entrepreneur to get stuck in. When everyone in your bubble is against you it is easy to lose faith.
The first thing Y Combinator did for me was give me the space to be my true self. And the partners pushed me to be my best self. We were extremely unprepared, but there one was person that believed in us no matter what. That person was Paul Graham.
Let’s back up in time. Shortly after Y Combinator rejected us, we pared the team down to just two, me and Denny. Occasionally we had an engineer friend help out during the evenings. For the most part the team was just us doing the best we could, which was largely nothing that ended up mattering. I took a lot of meetings with investors and experienced business people in the Seattle area. Most of the advice was terrible, but I am happy to say we did find and keep a few gems in Seattle. I can count these gems on one hand. When it came time, I invited these gems to join us as investors. Denny worked on the product, but if you look at our growth graph the progress made in 2012 was miniscule. The only real progress we made was, we didn’t die. Not dying kept us alive.
Everything changed the night we received an email from Y Combinator saying they wanted to pay for us to travel to Mountain View to interview with them for ten minutes. I remember this moment clearly. We sat in the front window seat at the late Bauhaus in Capitol Hill and I looked at Denny and said,
“We’re moving to the Bay Area. We’re taking my Camry and we’re never coming back. We leave the Monday before Thanksgiving.”
I don’t really remember how Denny responded because this was one of those moments when I have what Denny calls “a single track mind.” Time stopped and I was sure, the sure sure sure kind of sure.
I made this decision based off of two reasons. I wanted to move for the community and invest the cash we had in the bank.
By this time we had visited the Bay Area a total of three times. The friends we made in San Francisco were magnetic. The people we encountered had the values I was searching for in Seattle.
Investors take young founders seriously because they’ve experienced success investing in young founders. In the Bay Area I finally found investors that took us and our idea seriously. Investors genuinely believed in our mission, and showed they were willing to help us succeed in a very real way. The prices and terms my friends recieved on convertible notes were fair. In my opinion the prices on convertible notes were too high in 2013, but that gives founders more power, so I was okay with that. Investors stopped asking me about my exit strategy and discussion about acquisition was now a conversation of the past.
The bay area is a community of dreamers. What’s remarkable was that dreamers communicate their dreams, go back to their apartment and return with a working prototype of the first shot at their dream. The dreams matched in execution, something I rarely saw in Seattle. Being surrounded by dreamers inspired me to dream bigger and set an example that hard work can make your dreams come true.
The density of experienced entrepreneurs willing to listen to our story and give free advice was unimaginable. The advice I heard over and over again was to trust yourself, keep building, keep talking to users. This was the polar opposite in Seattle. The advice I got in Seattle was worry about IP, try to file a patent, make money first, and go to pitch events to network and meet “important” people. To a naive founder, advice is advice. The 22 year old me was not able to differentiate between good and bad advice. But, I was able to say that the advice from San Francisco felt right. When in doubt, go with your gut.
Things move at the blink of an eye in the Bay Area. When people want to help they help extremely quickly. The follow-up is usually right after a meeting and if you find one person who believes in you they will open up their whole network to you. In my case, strangers trusted me based on a 15 minute interaction and it was up to me to maintain a level of integrity to keep their trust. This is how things move quickly.
We had just raised our first $25k from another investor in the Bay Area. He said we were too early and had too little traction to be accepted to his accelerator, he liked us enough to invest half the amount they usually do in their core program companies. He asked us to reapply for the following batch.
Until this moment, my bank account had never seen more than $2,000. When the wire hit, I felt like we had won the lottery. It felt like I had an infinite amount of money.
We convinced our friends in the current Y Combinator batch to let us stay in a closet at their East Palo Alto home office for $600 per month. If we spent $1,000 a month we would have 25 months of runway, which seems infinite.
Taking outside money changed my perspective. For me , there was value in taking money from investors, not for the cash but because it made the undertaking seem more real to me. For this reason alone, this first investor holds a special place in my heart. He was the first person to believe in us.
To be very honest at the time I didn’t know if Experiment was going to work out. I justified creating Experiment because it seemed to me it was the right time to be building this business. Because no one else was doing what we wanted in the way we wanted, I felt an obligation to create this for myself and for the future mes. I also quickly found I was learning more in the process of failing over and over again than I had ever learned in any class or job. The story I would be able to tell was worth it alone.
Denny and I packed all of our belongings into my Toyota Camry and drove to the Bay Area. The first thing we did when we arrived was eat a burrito at Taqueria Guadalajara.
I have an unhealthy obsession with old National Geographic magazines. Months prior to moving away from Seattle, I met a man over Craigslist. He was helping his mother move out of her house into a retirement home. In that house was a complete collection of National Geographic magazine from 1950 onwards. I snatched all of them for the price of zero dollars.
Before we left for California we looked up the birth month and birth year of every Y Combinator partner. We felt that sharing the issue from their birth month and year was one of the most powerful ways to “show” the partners what we were building. We are building the future of science content online.
We showed up to Y Combinator for the interview with a stack of National Geographic magazines. One trick we learned is when going in for the interview you can go a day early to check in. There will be alumni there to help founders practice their pitch. While there you can check on the list of companies interviewing to see which track you’re on. Y Combinator splits up the interview in tracks so groups of partners interview companies together.
We looked for companies before us on the same track to easily find out that we were interviewing with Paul Graham, Jessica Livingston, Robert Morris, and Trevor Blackwell. I later learned these were the four founders of Y Combinator. Yuri Sagalov also happened to be in the room.
The National Geographic magazines became a problem because Jessica is a relatively private person. We found a photo of her blowing out candles on January 31st, so we were unsure if she was a January or February baby. That’s ok because we brought both copies just in case.
It is our turn for the ten minute interview. As I walk in the door, Trevor turns to me and says, “Oh, you’re the cheeseburger girl.” Great, one out of five people in the room might think I’m a fool. During our interview video, I wore a cheeseburger costume. Well, because why not. I didn’t think we would get accepted.
We showed up to the interview and the first thing I try to do is show the partners our live product.
PG immediately asks me to put my laptop away. He tells me that a good founder is able to clearly describe the problem they’re solving using words. In this moment, I started to question if I had what it takes to be a good founder.
So, I start to explain in words.
The first question. PG turns to Robert Morris and asks, “Robert, is science funding really a problem?” In that moment in time, I thought to myself that they fate of our company rests in this single answer of one MIT professor. I don’t know why I was concerned. Robert answered, “Well, National Science Foundation rejects about 90% of research proposals now, so yes.”
I’ve never been so relieved. Our interview surpassed the 10 minutes allotted. Someone came in to get us. As we walked out I remember looking at Denny and realizing all the important points we forgot to share with the partners. I was certain they would reject us. The interviewers gave me the impression that they felt we were extremely noobish, which was true. We weren’t interested in denying that.
As we walked out we remembered the National Geographic magazines. We handed each of the partners their National Geographic Magazine from their birth month and year. I remember Denny handing PG his.
“PG, This is what science looked like when you were born.”
Jessica ran after us and asked, “How did you find my birthday?” It turns out we got her birthday month wrong and gave her the January issue. Luckily we came with the backup. She is a February baby.
I generally advise people to avoid doing gimmicky things like this. They rarely work. To this day I still do not know if the partners liked the magazines. Years later I did meet a woman who said she remembered us because her boyfriend at the time, who is a partner at Y Combinator, received one of these magazines. I guess he held onto it. The way I see it is I may never know what the person on the other table truly thinks. The way I justified it was I thought if I would be excited to receive this gift it is likely that others will also be excited. Treat others the way you would like to be treated. And, only try to control what you can control. These two statements have saved me a lot of headache.
We felt the interview went terribly. Denny and I drove back to our new home in East Palo Alto and started drinking. We had visited Whole Foods the night before and walked by the granola aisle. If you’ve never been to Whole Foods before the granola aisle is this aisle in the grocery story with a couple dozen kinds of granola all priced between $4.99 per pound and $15.99 per pound. We knew we couldn’t afford the granola, so Denny and I made a deal that if Y Combinator invested we would come back to buy all the granola.
At 5pm we get a call from an unknown number. Denny picks up. It is PG. He says Y Combinator would like to invest a certain amount of money for a specific amount of equity. The program starts tomorrow. Are we interested in joining?
Denny looks at me, but then says yes on the spot. We spend the rest of the evening drunk at Whole Foods in the granola aisle.
Denny is a man of the internet. I am not. Going into this, I had no idea what Y Combinator was. I had no idea what being in Y Combinator meant. I never read Hacker News. I had just learned months ago that websites that I spent countless hours on like Neopets and Facebook, were in fact businesses.
I didn’t go to an ivy league school, nor did I ever dream of going to an ivy. During my senior year of high school I applied to one university because I was pretty sure I would get in. If I didn’t get into University of Washington, I thought maybe I could just continue working at Starbucks. Maybe I would go to the local community college. I got paid more at Starbucks than I was paid when scooping ice cream at Baskin Robbins and I enjoyed the people.
There I was, in the belly of the beast. I was one of dozen women in a room full of roughly 100 “real” entrepreneurs. Many of our peers had built a previous company, earned a PhD or MBA, were making millions of dollars in revenue, or in some cases all three. Our batch was very small with 48 companies. Y Combinator decided during our batch to make the program much smaller and more selective. They had experimented with making the previous batch larger and run into some significant issues.
There we were in the center of it all, one of the youngest teams in the room.
I would later find that most of our peers in the batch felt that their interviews with Y Combinator went terribly. Many also felt the same imposter syndrome that we were experiencing.
On the first day the kick off got really serious. PG said that the next three months are extremely important. I remember clearly the instructions were that if a friend asked me to help them move, the right answer should be I can help them after demo day. The other most memorable part was that PG said was we should only do 2.5 things until demo day.
One, talk to users.
Two, build product.
Point five, exercise.
So, that’s what we did. I talked to users. Denny and our engineer and designers built product. And, we all started going to the climbing gym regularly.
I talked to so many users. I flew to meet users. I didn’t really understand what talking to users meant. Because I didn’t understand what talking to users meant when we were invited by a prestigious foundations to spend a weekend in a “think tank” with them I said yes. When I was invited to talk at a top tier university I said yes. I said yes to everything and that got us no where. I lacked focus.
One month in I ended up in a rut where I was responsible for repurchasing shares from early contributors. Those negotiations nearly killed me. There were full days where I never get out of bed. I tried to sleep away all of my troubles.
Every week there is a dinner. I loved these dinners. I also hated them. I loved them because they serve food camp style. I love camp. A successful founder will come in and tell us a bunch of secrets off the record, and we got to see the progress all of our new friends were making. I hated dinners because I knew we weren’t making the progress that we hoped for. I hated myself because I didn’t know what I was doing wrong. I followed instructions. I was talking to users.
During group office hours Paul Buchheit asked each team,
“If in 5 years you end up at Google, what went wrong?”
Denny answered, “If we end up at Google it is because we failed to execute.”
I was failing to execute, but I didn’t know how to fix it.
Then there was one Tuesday evening at dinner. PG got on stage to make an announcement. “If you are not sure if you are failing, come ask me at dinner.” Denny and I go up to PG begrudgingly and ask,
“Are we failing?”
PG thinks about it and says “Let me check.” He shuffles back into his office to check on his notes and comes back with a definite, “Yes.”
“Yes, but we can fix that.” He grabs Qasar Younis, at the time Qasar hadn’t joined as a partner yet, and he says, “Qasar, meet the Microryzas.”
“Qasar can help you.”
We sit down with Qasar. It turns out the Qasars’ previous company was a crowdfunding site for customized t-shirts. He was now at Google, but he told us exactly what we needed to hear.
He asked us what metric we care about most. For two months we were struggling between two key metrics: projects and transaction volume. Qasar told us our metric was going to be projects. He then followed up with, “How many projects do you think we can get by next Tuesday?” I said one. He said two. Ok, two it is. My goal was to recruit two projects to launch projects before next Tuesday.
One challenging thing about our business is scientists are slow moving creatures. They’re used to submitting a proposal and waiting a few weeks or months to hear back. If they are accepted, then they start the next step. We were trying to change the behavior of scientists. That is a red flag right here.
To reach our goal I started to write proposals for scientists. I emailed all of our warm leads from organic project proposals. If they didn’t respond, I followed up with a phone call or showed in person at their office saying I was “in the area”. I started to call faculty and graduate students that I knew. Once I got two leads that committed to writing a proposal through our platform, I hounded them every day and made sure they had all of my support to be successful.
We came back on Tuesday to Qasar with two launched projects. That is more projects than we had launched in the past two months. Now, Qasar said next week your goals is 4. The next it will be 8. The following it will be 16. And, then the week after it will be demo day. Because we already had a small win, I just accepted the challenge.
For four weeks I did nothing but recruit scientists manually. I wrote proposals myself. I edited videos myself. I did everything humanly possible to get these researchers up and running with project pages they were proud of. I promised the scientists I would do everything in my power to get them funded. I had no idea if I could keep this promise, but I knew I would do this or die trying. I take promises very seriously.
We printed a graph of this projected project number graph. I printed this graph on computer paper and taped it up on the bathroom wall, in the refrigerator, on my bedroom ceiling, everywhere. I used it as my desktop background.
I didn’t sleep much that month, but we made the graph. On top of that, Denny and our product team launched a new design for the product.
Investors and the startup community give Y Combinator a lot of criticism for encouraging founders to make this up and to the right graph. I don’t exactly know how this graph affects other Y Combinator companies, but I can tell you how it affected me. Being able to go up on stage and say honestly that we had been growing 100% week over week gave me to the confidence to then have a more in depth conversation with investors about our dreams for science. It gave our team the credibility to say when we work hard, we can get something done. The graph helped us get the meeting.
In our investor meetings there was not an expectation that the graph would continue to go up and to the right. The proof of execution was just a conversation starter and evidence that our team could recruit scientists if our life depended on it. It turns out Experiment’s lifeblood is projects. The existence of the company depends on our ability recruit scientists.
This brings us to Demo Day.
Demo Day is an artificial deadline that the Y Combinator program creates. All companies present their progress to a room full of hundreds of Y Combinator vetted investors. These investors generally have not exhibited bad behavior in the past and are for the most part founder friendly. The catch is each company only has 2 minutes to pitch. In a rare case investors will invest on the spot. It is more realistic that the 2 minute pitch helps get founders a second meeting.
The week before demo day one founder from each company will stop everything they are doing and work on the pitch with PG and partners. We decided that I would pitch.
We had a very serious discussion with PG during our pitch preparation session. PG turned to us and said,
“Microryzas, I think you’re going to have a really hard time convincing investors.”
Weeks prior PG tried to convince us to become a non-profit. PG felt that being a non-profit might be easier for us to help scientists raise money. Denny and I felt it didn’t make a difference if we were a non-profit or for-profit. We felt the greatest challenge was the same regardless of company structure. We felt, and still feel, there is a lot of value to be created once we establish the network of scientists and funders. We feel that this is a good business opportunity. PG asked Sam. Sam agreed that company structure wouldn’t make a big difference.
Anyways, PG goes on to say that he thinks that VCs will not want to invest because one, we look like toy, and two, the founders seem too altruistic. So, PG starts to make a list of individual investors that he thinks would invest because they have a predisposed interest in science. PG ended up being wrong.
Walking out of that meeting I was pretty concerned. Even thought Denny and I both saw the business opportunity it seemed that PG didn’t. And if PG didn’t then it was likely that other investors wouldn’t.
We moved ahead. PG coached us and ironed out our pitch into four main points. It ended up being four points because PG said that is all anyone can remember.
Microryza is the Kickstarter for research.
We are growing 100% week over week.
We fund the long tail of ideas that will transform our world.
What we created turns everyone with a credit card into a modern day patron of science.
To this day I can still recite our demo day pitch by heart. I practiced in the shower. I practiced walking around the neighborhood park in East Palo Alto. I practiced in my dreams.
The day before demo day is an event called alumni demo day. It is essentially a dress rehearsal for the real deal. The Y Combinator alumni return to support the new batch.
I’m getting ready to go to the Computer History Museum for alumni demo day and we start to see a spike in traffic. The numbers are growing and growing. The source? reddit. It turns out that a redditor posted a question, “Is there a Kickstarter for science?” Another redditor posted “microryza.com.”
As Denny tended to traffic and questions on reddit, I drove myself to the Computer History Museum. This is when we modified our foolproof pitch to start with,
“Today we were on the front page of reddit, the internet wants what we’re building.”
Demo day itself was a whirlwind, but we went in with a clear strategy. This was a pro-tip given to us by alumni at a dinner.
Denny and I decided to split up at demo day and collect as many business cards as possible. The person with the most business cards would be the winner. Y Combinator had already qualified these investors for us, so we took advantage of this and made it a numbers game. How many investors could we meet in a 5 hour period? By the end of the night I had lost my voice. We celebrated with our batchmates at the local bar in Mountain View. And then, the real work began.
I don’t think I drank that night. All I could think about was the spreadsheet.
We created a spreadsheet to rank the investors we met.
Investors got four main scores.
How much Cindy likes them
How much Denny likes them
How much they like us
Their average check size
We knew how much investors liked us because during demo day YC has a system where investors can express interest in startups they like. We as founders can also see how many other companies they also liked. Investors got docked points if they liked too many other companies.
Denny created an algorithm. We ranked them and then started at the top and split up the work. We added a select number of investors not at demo day that I really wanted on our team. We had 99 people on this list.
Right before demo day we closed our first $10k. One of our informal advisors had asked us to meet and said she wanted to be more involved, so I asked her to invest. Surprisingly she said yes on the spot. If someone says yes, always ask how much. She said $10k. Asking advisors to invest was a pro-tip given by Y Combinator.
That’s when I learned that if you don’t ask you don’t give the person on the other side of the table the opportunity to say yes. Nowadays, if I like the investor now, I will always ask. It doesn’t matter how much people invest, it just matters that they are financially invested. Being financially invested changes everything. Even if it is symbolic, suddenly they have something to lose.
I didn’t know our terms. I didn’t know anything about investment documents, but one thing I knew to be true was I wanted this person on our team. We’ve always optimized for good people and this is one area where I feel I’ve never been wrong.
This single investor ended up being the most helpful person for making introductions to other investors. This single investor along with Y Combinator ended up being my two confidants for the round. Don’t underestimate the value of a confidant during fundraising. Your confidant cannot be your co-founder.
We started the morning after demo day with a 6 AM phone call with an investor in New York City. I had lost my voice, so I sounded like a man during the whole fundraising process. Maybe that was a strategy?
Then it was meetings back to back. Literally back to back. I was doing calls in the car by speaker phone driving up and down the bay. After I closed the next $100k, Denny moved to recruiting engineers.
I did 61 meetings in 10 days.
For one investor that I really wanted on our team, I picked her up from SFO Airport and drove her to her meeting in Mountain View. She said she wouldn’t invest, so I asked her if she needed a ride back to the airport the next day. I would bring Denny. Maybe she just wanted a free ride, but I like to think she wanted to meet Denny. I had made the mistake during the first drive by telling her Denny was taking a nap. Noob move. Honesty is the best policy right? We drove her back to the airport and right when we got to departures, she pulled out a checkbook and wrote us a check for what she intended to be $10k, but got upgraded to $15k.
I want to stress is that our fundraising success was not by accident. This was engineered.
If you want something, set yourself up for success. Other than love, I think most other things can be translated into a numbers game. Of course you’re going to need luck on your side. Good thing I was born with luck. I am a New Year’s baby.
Beware. Don’t make the mistake of treating people like numbers. Humans are individuals and should be made to feel special because they are. Be genuine.
From a scientific point of view, it is a numbers game. If you qualify your investor leads early on, you just keep taking meetings until one person says yes. You only need one person to say yes to get this started.
The numbers game gets you the meeting. There are a lot of nonintuitive things that I learned about closing, but strategies for effective fundraising are for another time.
You might think I sound frantic. I was frantic. I was 23 years old at the time and within 10 days convinced few strangers to commit to investing $800k. I was really insecure about closing investors, so I emailed PG and Jessica.
Here’s what PG said:
“Just give them time. This email sounds frantic. If you seem similarly frantic in person, you may be harming your chances.”
PG, also warned that if I seem similarly naive in person I may also be harming my chances. I am lucky to report that I didn’t feel any discrimination for being female during the fundraising, but I did feel the ageism when speaking to investors. Thinking back on it, the ageism may have been imagined by me. The fact that I felt young and inexperienced mostly stemmed from the fact that I doubted my own abilities. I wouldn’t get over this until two years later when I almost sank the ship, which is another story for another time.
Be wary. Once one respected investor is interested, everyone is suddenly interested. No matter how you view it, investing in startups is an irrational decision making process. There was one investor that was really communicative during the whole process, I would say overly earnest with the communication.
Immediately after I got word that SV Angel was investing, he called me immediately and confirmed their fund wanted to invest. We did a handshake deal over email. They wanted to take a significant part of the round, $200k. I thought the round was over.
It was too good to be true.
That next Tuesday I went to Y Combinator and told Geoff Ralston the good news. We had handshake deals and in many cases signed documents. Over $800k of the round was committed. Geoff looked at me and said, “Cindy, how much money is in the bank?” I said none yet, but I had followed the handshake deal protocol. These investors had made a promise in writing. I take promises very seriously. I would quickly find that many others don’t. That fact alone would make my job a lot harder.
“The deal is not done until it is done.”
In this case, the deal is not done until the money is in the bank.
That was news to me. I quickly went back to collect the cash.
Back channeling was key for closing our round. There were often one to two champions behind each investment, mostly manufactured by me, to get each deal done. Often these champions would be our batch mates or Y Combinator alumni.
Everyone that committed the first $800k ended up signing the standard docs and wiring the money, except for one investor. This was the one investor I mentioned earlier that was overly earnest.
This one investor expressed the most consistent interest out of everyone I spoke to. It was counterintuitive to me that they would be the one to break a handshake deal. I spoke to all four partners at the fund. On the fourth partner, he tried to change our terms and ask for special treatment.
It was impossible for me to do this at this point because I had already signed paperwork with the rest of the round and they had already committed over email to the standard docs at a price. I felt it was very important to make the deal fair for everyone involved, so changing the docs was one area where I was unwilling to budge.
This investor ended up meeting with me a week later and saying they were pulling out of the deal. Y Combinator ended up standing up for us. I was hoping that our encounter would be the last time this VC firm would break a handshake deal with a founder. I was wrong. I learned a year later that they had broken another handshake deal with one of my friend’s companies.
At the time this situation felt disastrous to me, but I am so happy today that this fund is not on our cap table.
I ended up doing background checks on all of our investors by speaking with founders they’ve invested in. It turns out that asking to be connected with founders they’ve invested in is an effective way to get investors to invest. We also met a lot of founders I respect this way.
When founders ask me for advice on fundraising, I always tell this story. It is not important who this investor is, but it is important that founders recognize that this can happen to you. Breaking handshake deals is not a rare occurrence.
There are investors that seem genuine and seem more excited about your business than you are, but always remember “the deal is not done until it is done.”
The round took longer than expected to close. One because one $200k check had dropped out. We ended up closing a total of $1.23 million the final investor wiring money in early May.
The last two investors I recruited for the round ended up being two of our most helpful partners. If you find someone good, always let them in. It doesn’t matter the price. You can’t buy good people. And, good people may rescue you in the toughest times.
After all of this, I realize that one thing that I could have optimized for is operators. Investors who have operated companies are often the most helpful at the early stage. These are founders and early employees of successful startups. I find that founders one to two years ahead of me often give the most useful advice. If I were to do this again, I would spend most of my effort recruiting operators as investors.
This week Experiment turned 5 years old. There is a lot more to the story, and I can guarantee you that the story gets better. I’ve come to the realization that I’m running a company by way of writing the best story I can.
I received a lot of practical advice from Y Combinator alumni when applying. Below is the advice that I agree with and some lessons that I learned along the way.
Be concise. One mistake that founders make is over communicate. Say more with less.
Don’t spend more than two hours on the first draft.
Get feedback. Ask Y Combinator alumni to review your proposal. It is likely we will say yes. The worst thing that can happen is the founder says no or doesn’t respond. For most of us, an alum helped us out when we were applying. It is really easy for me to say yes to reviewing applications. Keep in mind founders are very busy running their companies, so you have to make it easy. For me I always ask applicants to send me a Google Doc with their application and enable commenting.
One benefit of asking Y Combinator alumni to review your application is if they like you or your product they can recommend you to Y Combinator. Don’t ask for an intro to the partners, that will not help your chances. Y Combinator alumni can recommend you through the application system online.
Set it and forget it. Submit your application and get back to work.
Your job is to be a good founder and being a good founder doesn’t include applying to Y Combinator.
If you are invited to interview don’t do anything differently from what you were already doing. What you should be doing is growing your company.
Up until two days before the interview focus on building product and talking to users. The most powerful thing you can use to convince an investor is traction. Try to grow one number week over week, build the best version of a prototype, or get signed contracts.
Two days before the interview you can do two things.
The questions partners ask in the interview are fairly standard. You can find most of the questions on this tool, iPG. You should be able to answer each question in 15 seconds. Be concise.
Denny and I made a spreadsheet of all the questions in iPG and each wrote answers independently. Then we compared answers to make sure we were on the same page. We made sure we had identical answers. This was intentional to show we, the founders, were on the same page. Answers were one sentence long, two at most. Some answers were only two to three words. For example, the answer to “Who is the CEO?” should always be “I am.” The answer should come from the CEO.
Then we split up the questions. If a partner asked one question we already knew who it was assigned to. All wildcard questions related to business and community were answered by me. All wildcard questions related to product and engineering were answered by Denny. This ensures you make the most of your ten minute interview.
The second thing you can do is ask YC alumni to do mock interviews with you to practice. I don’t do mock interviews with founders anymore because I can’t afford the time, but I used to and many founders will. You can also go to YC early and there will be alumni there helping with mock interviews.
If you are accepted to Y Combinator and decide this is a good decision for your company, I have few recommendations.
Get to personally know individuals in your batch early. Tuesday dinners are a great opportunity for this. Keep a few friends really close.
Throw parties. Or, be friends with the people who are throwing parties. Throwing parties is a good way to get to know others. The time commitment is relatively contained to one night and it will always be a good time. These memories will last you a lifetime.
Pick a metric early and make a projected graph. Do whatever it takes to hit your numbers. This will be over in 3 months. Sheer brute force is more powerful than you think. For founders that are building something new, it is nearly impossible to be successful because the customers come to you. One of the founders has to be an extremely good sales person. Good thing sales skills can be learned.
Attend Tuesday dinners. Go up and introduce yourself to the speaker. You never know when they will come in handy. The speakers are often people that are very hard to get a hold of.
Meet all the partners early, preferably in the first week. Pick one partner that you like (not the one that Y Combinator assigns to you) and stick with that person through the whole program. Use them as your coach. Come to each office hours prepared with what you are working with and what you need help with. People are often surprised that office hours only last 15 minutes. You’ll learn you can get a lot done in 15 minutes.
Go heads down. Only do three things: talk to users, build product, and exercise. Also try to eat healthy. Say no to everything else. Everything.
Don’t talk to investors. Investors will reach out to you because you are in Y Combinator. Unless you already know you really want to meet them or they can help your business right away, tell them that you would love to meet but after demo day. This was one of the hardest things for me to understand and was something that I disagreed with the partners on for a long time. Really understand the utility of investors during the three months and make sure the investor meetings are critical to your success. Usually they are not.
If you feel depressed or feel stuck, get help early. The good thing about being in a dark place is there is nowhere to go but up. Depression is a real thing. Don’t let yourself shut down. If you are struggling with this tell yourself that the first step is showing up. Have the will power to just show up. Keep showing up and it will get better. I’ve been there.
Understand the social networks in your batch. Our batchmates became some of the most powerful forces when it came to fundraising. Most people in the batch were experienced in the Valley. Because of this, we were one degree from everyone in the Valley. I’ve always had an interest in getting to know people, so it came naturally to me. I’m the kid in middle school that knew every single person in the yearbook, who dated who, who’s parents were friends, etc. This data becomes powerful when you’re herding cats, investors. If you already have a genuine personal relationship with your batchmates it will be easy for them to recommend you.
That’s a lot. 3 months is a long time. But then again, I think 24 hours is a long time.
Even now that we are in New York City we still regularly meet with Y Combinator partners. Why? Because I trust them.
My first line of defense when encountering a problem is Bookface, a private forum for Y Combinator alumni. My second line of defense are a few founder friends and a select number of investors.
Y Combinator partners stuck up for us when investors were treating us poorly. Bad investors are experts at taking advantage of naive founders. I trust Y Combinator because we’ve established a relationship four years. They’ve seen us at our worst. They’ve seen us at our best. But the power doesn’t end with the partners, the real power is within the network.
If you’re a skeptic like me, you won’t believe the power of Y Combinator until you see it for yourself.
Y Combinator is not for everyone, but for me it made all the difference.