0:00

Every founder looks at Airbnb and just imagines Airbnb

0:02

in the early days must have been something special.

0:04

And actually, they kind of all look the same.

0:06

For founders just starting out, they

0:09

think that the trajectory and the

0:11

growth graph of all the successful

0:13

startups looked like this. You

0:16

know, just like constantly up into the

0:18

right and they don't see the early,

0:20

early days. It might be hard to

0:22

imagine, but the founders of companies like

0:25

Airbnb, Stripe and Dropbox

0:27

at one point or

0:29

another looked indistinguishable from

0:31

other startups getting started in their

0:33

time. We like to

0:36

put companies on a pedestal as

0:38

if they were great from day

0:40

zero, but it isn't actually

0:42

like that. It's actually

0:44

the tens of thousands of

0:47

decisions along the way that

0:49

made them great. Every

0:51

company, no matter how successful it

0:53

becomes, has to start somewhere. And

0:56

that is what you'll hear about today. Jared,

1:09

I would love to hear about SoluGen. I really like

1:11

those guys. I've talked to a few times, but I

1:13

was not in the interview. So what what was that

1:15

interview like? So SoluGen

1:18

produces industrial chemicals,

1:20

primarily hydrogen peroxide. For a long time, it was

1:22

like just hydrogen peroxide and now they make other

1:25

stuff. So hydrogen peroxide, the same stuff that you

1:27

buy in a drugstore that you put on a

1:29

cut or something, that's what they make.

1:32

And they had invented a new process for

1:34

making hydrogen peroxide that uses a new organic

1:36

catalyst. And you don't need massive heat and

1:39

massive temperature and it won't blow up on

1:41

you. And because they

1:43

had this process scaled down, they were

1:45

able to start making really small quantities.

1:48

Talk about humble beginnings. I remember the SoluGen

1:50

interview, because it was a really fun one.

1:52

It was just back when interviews were still

1:54

in person. And if you remember, back in

1:56

the old in-person days of interviews, when people

1:58

had like a harder product. they would actually

2:01

bring them to interviews. And so... It

2:03

was great if it was food. Yeah, because we would eat it.

2:05

Because we got food. They

2:08

bring it hydrogen peroxide. They literally brought

2:10

in hydrogen peroxide. So

2:12

they showed up to this interview and were

2:14

like sitting in this room and the hydrogen

2:16

peroxide guys walk in and they literally have

2:18

a beaker of hydrogen peroxide, which I think

2:20

at the time was like most of the

2:22

hydrogen peroxide they'd ever produced. And during the

2:24

batch, basically their goal was to

2:26

figure out how to sell like bottles

2:30

of hydrogen peroxide. Because they

2:32

wanted to generate revenue and to prove that this was

2:34

a real business. So rather than trying to like raise

2:36

$100 million to build like

2:38

a giant facility, they literally set up

2:40

shop in their garage and they would

2:42

just start making bottles of hydrogen peroxide

2:45

and selling to anybody who would buy

2:47

a bottle of hydrogen peroxide. Today, they

2:49

actually have this huge plant in Houston

2:51

that ships out like tanker truck fulls

2:53

of hydrogen peroxide like every day. In

2:56

the interview, what did they say

2:58

that convinced you? Well, the cool thing was

3:00

one, these guys clearly had like great backgrounds

3:02

to be doing this, they were definitely experts

3:05

in this. But unlike

3:07

some of the academic science folks that we

3:09

interviewed from time to time, these guys were

3:11

doers. They like, they weren't waiting for anyone's

3:13

permission to go do the thing. They had

3:15

like made the hydrogen peroxide and brought it

3:17

in and they were like trying to find

3:19

somebody to sell it to. They clearly had

3:21

like a bias for action. It's the doer

3:24

mentality that applies to any

3:26

kind of startup idea in interviews. And

3:29

also the willingness to admit that you may not

3:31

have all the answers, you may not be able

3:33

to think all the steps ahead of how you

3:35

build a big company, but you're

3:38

down for the ride. Like you're

3:40

ready to do it and you're signed up for

3:42

the journey and you'll figure it out later. You

3:44

have to be comfortable with this idea that you know

3:46

you're gonna do a thing and you're gonna work really

3:48

hard at it. And you don't really have all the

3:51

details worked out, but that's okay. One of the best

3:53

lessons I've learned in my career is to not worry

3:55

too much about what it's like at the top of

3:57

the mountain. The most important thing

3:59

is to. to decide that you're going to

4:01

make it there and to take that

4:03

first step on the journey. And

4:06

sometimes that first step means building

4:08

a demo before you even

4:10

have any customers. One

4:13

company I wanted to talk about is Captivate IQ.

4:16

They did what I see in winter 18 and

4:19

they build software that helps the sales team figure

4:21

out the compensation. So if you have lots

4:23

and lots of salespeople, it turns out

4:26

it's quite a complex math that goes

4:28

beyond my sales skills to figure that

4:30

out. And they had

4:32

built some demo software. One of the founders built

4:34

a demo, but they had no customers and really

4:36

nothing else. And that's how every company starts, right?

4:38

And every founder looks at Airbnb and just imagines

4:40

Airbnb in the early days must have been something

4:42

special. And actually they kind of all look the

4:44

same. And then they convinced us that there are

4:46

only two major players in the space in the

4:48

US and they're both big and they're both pretty

4:50

bad. So they convinced us that

4:52

like, if we just become better than these two players,

4:54

we can win the space. Yeah. I

4:57

think that's another mistake founders make where they

4:59

sort of say, there's no competition. It's like

5:01

blue ocean or whatever. And the reality is

5:03

that's an indication no one wants the thing.

5:05

Whereas if you've got these huge incumbents that

5:07

making tons and tons of money and haven't

5:09

innovated in decades, actually that's perfect. Yeah. Because

5:11

it's like a demonstration that people actually pay

5:13

for this software. Yeah. And this is

5:15

one of those companies where everything they kind of said at the

5:17

interview turned out to be true. And so

5:19

the normal state of a company when it

5:21

applies to YC, I think back to my

5:23

application, I was working with two friends in

5:25

a bedroom in London. We cobbled together this

5:28

janky prototype. Like we bullied some friends into

5:30

using it. We had no revenue. In fact,

5:32

we were losing money on every single transaction.

5:34

And that's pretty normal, right? Even

5:36

earlier, I think YC's today is going back to

5:38

sort of the origins of YC of funding people

5:40

earlier and earlier. So a lot of people I

5:42

interviewed this batch, I'm sure it's the same with

5:44

you, haven't even quit their jobs yet. And they've

5:46

got an idea. And perhaps the idea is something

5:48

they'd worked on their previous job, a tool they've

5:51

built or a problem they'd identified. And

5:53

they've recruited a couple of co-founders to come along to

5:55

the interview. But really, there's not

5:57

much there yet. You're really looking more at

5:59

the... the quality, the founder,

6:01

than the progress of the business.

6:03

That's a big point for all

6:05

startups. Don't be afraid to pivot.

6:08

Many of the most successful companies

6:11

initially pitched ideas during their

6:13

interview that didn't work out.

6:15

That isn't necessarily a sign

6:17

of failure. What's most important

6:19

is that you have the drive

6:21

to keep trying until you do finally

6:23

land on the right idea. So

6:26

what type of people have the

6:28

perseverance to keep grinding until they've

6:30

made something people want? Next up,

6:32

Diana and Michael will talk about one

6:35

common trait of the best early stage

6:37

founders. To be best in the

6:39

world. This is aspect of the best people

6:41

at the top of their careers. They're

6:44

actually very not well-rounded. They're

6:46

very quirky people for a

6:48

good reason. And

6:50

that's what makes them outlier.

6:52

By definition, if you're average,

6:56

then it's like, okay, you're not gonna

6:58

build a great company. Because building a

7:00

successful large company, by definition, you're gonna

7:02

be out of multiple standard

7:04

deviations out of the norm. You

7:07

have to go all in. And I think

7:09

that a lot of young people have never

7:11

been, it's never been

7:13

communicated to them that the strategy that got

7:15

them to this school, that

7:18

got them the meta job, that got them

7:20

the Ivy League degree is

7:22

not gonna be the strategy that actually gets them

7:24

to be successful as a startup founder. And

7:27

I'd argue not all careers are this way. I'm

7:29

sure there are other careers where that kind of

7:31

hedging strategy is still a great strategy. But

7:34

in our game, so

7:36

few people win. Like the

7:38

problem is like so few people turn

7:40

any amount of their

7:43

like paper stock value into real

7:45

cash that like you have

7:47

to be lucky and

7:49

really good. Some of this may

7:51

seem like it's outside of your

7:53

control, but that's not necessarily the

7:55

case. You can create

7:58

your own luck by staying determined.

8:00

and shutting out all other distractions

8:02

in your life. As you'll hear from

8:04

Harge and Pete, you just have to

8:06

keep at it. Here's like another interesting

8:08

case is Amplitude, which is now like

8:10

a public company offering

8:13

an analytics product. And we interviewed

8:15

the founder of Spencer and Curtis in

8:18

2011 now, so it's been kind of like

8:20

a while. And they applied to IC with

8:22

this idea that was a mobile

8:25

app on your Android phone that

8:28

was voiced to text. So basically the idea was,

8:30

hey, if I want to text while I'm driving,

8:32

I'll talk into the phone and it will like

8:34

send my texts for me. And we didn't think

8:36

the idea had any legs at the time because

8:38

we were like, well, like Google's just gonna do

8:40

this. They're really good at this. And like we

8:43

had Paul Buhayet, the founder of Gmail, early

8:45

Google employee in the interview,

8:47

just like hammering on Spencer saying,

8:50

like Google is so great at this. Like

8:53

there's no, like how are you guys gonna win? And

8:56

Spencer was just so like, so

8:59

intense in like his comebacks and just

9:02

like determined to like work on this

9:04

idea. We were like, we don't agree

9:06

with like this idea, but this is

9:08

the kind of like intense person you

9:11

want. Like they're almost irrationally intense in

9:13

how attached they are to the thing that they're

9:15

working on. You want to fund people like that.

9:17

And it took Amplitude, I think a year and

9:19

a half after YCE to find the idea. But

9:22

once they did, obviously it like really took off.

9:25

And so there's almost like a sort of like

9:27

an obstinance about like the best founders where they're

9:29

just, whatever they're working on, they don't

9:31

do it at like 60 or 70 or even 80%.

9:35

They're always just like 100% like committed and

9:38

have high conviction in what they're doing. And then they

9:40

just need to get in the right direction and they're

9:43

like basically unstoppable. Yeah, it's a good

9:45

reminder that some of these

9:47

founders came into YCE with like

9:49

actually objectively bad ideas. Like there were the Brex

9:51

founders who I think were working on like a

9:54

VR startup at the time. The segment

9:56

founders, I think when they did YCE, they're

9:58

working on like an ed tech segment. really

10:00

another great example like Segment ultimately

10:02

was bought by Twilio for like $3 billion.

10:05

And they also went to like developer

10:07

tools and API services, they applied to

10:09

YC with this idea, it was to

10:11

let professors who are giving a lecture,

10:13

like poll their students. And like

10:16

no one wanted this, like you had zero traction.

10:18

And we like again, we push them like you

10:20

guys are really smart, you're great engineers, why don't

10:22

you work on something that's like technically hard versus

10:25

this like very obviously student idea. And they were

10:27

just obstinate, like, and it was but they weren't

10:29

like obstinate without direction. They were like, what we

10:31

are really passionate about is fixing education. And we

10:33

think this is a really good place to start.

10:36

And like, we're inspired to work on this mission

10:38

of fixing education. And so we were like, okay,

10:40

like, again, they have this intensity, and they have

10:42

this like, thing that they're really committed to. And

10:45

eventually, again, they figured it out with the Segment

10:47

idea, but it took them a while. This is

10:49

what happens when you have that like, obstinate,

10:52

like, if you're in the wrong direction, you

10:54

can like, get dug into

10:56

it for a while. Even longer. Yeah, even longer, right?

10:58

Like, but that's just like, maybe that's like the unity

11:00

and the yang of it, like, because if you're only

11:02

ever doing things like 60% of the

11:04

time, like, you then just risk like always

11:06

kind of being in a 60% state. You

11:09

may be seeing a pattern here, the key

11:11

attributes that come up time and

11:14

again, are grit and determination. If

11:16

you give 100%, then you increase your chances of being

11:19

in the right

11:22

place at the right time for things to

11:24

take off, even if it's not

11:26

your first, second or even third

11:28

idea. Next up, we've got Brad

11:30

and Nicola talking about how many

11:33

of the top founders were clear

11:35

and concise with their pitches from day

11:37

one. One company that comes to

11:39

mind that I had the good fortune to interview

11:41

that has gone on to be pretty successful is

11:43

a company called Jeeves. They

11:46

are a digital bank for startups based

11:48

outside the US. And when we interviewed

11:50

them, it was two

11:52

founders with pretty

11:55

much the exact idea that they have now, which

11:57

is pretty impressive. But it was really

11:59

an idea and a lot

12:01

of homework, but not much actual action

12:03

just yet. So how did they convince you?

12:06

I mean, were you impressed by them? Like

12:08

how did that go? Yeah. So I went

12:10

back, reread the application the other day. And

12:12

one thing that jumped out to me from

12:14

the application itself was that it

12:17

was very clearly written. The

12:19

language was very plain and simple

12:21

in the application. And

12:24

it was also pretty succinct. So

12:26

we have a question in the application about,

12:28

um, how much progress have you made so

12:30

far? And I think they literally just

12:32

had two sentences. We've completed

12:34

a deal with our first bank

12:36

partner and are ready to

12:39

start onboarding initial customers. That

12:41

was it. Now, in my mind, reading

12:43

that I, that's the answer. Okay, great. That's what

12:45

they've done so far. And it's

12:47

very easy though, for founders that are applying to

12:49

YC to just do like paragraph after paragraph, first,

12:51

I did this, then I did this, then I

12:54

did, right. Get into pitch mode. And

12:56

so looking back at that, I immediately, you know, that

12:58

jumped out to me. And that would jump out to

13:00

me today. Someone just very confidently and succinctly saying, this

13:03

is the most noteworthy part of what

13:05

I've done. Makes sense. But that's the

13:07

application. How about the interview itself? It's

13:09

interesting because they came in and they,

13:12

you know, they were well-spoken. Um,

13:15

we got what they were

13:17

working on. It all came across very clearly,

13:19

but they were also pretty upfront about things

13:21

that they did know and didn't know. And

13:24

they, you know, they didn't

13:26

try to like razzle dazzle us with

13:28

like fake traction or anything like that.

13:31

Um, it was pretty clear that they didn't

13:33

know yet what the actual usage

13:35

was going to look like or what the demand

13:37

was going to look like. They had a few

13:39

early customers they were excited about that they'd signed

13:41

up maybe since applying, but before the interview, but

13:44

there were many question marks. But

13:46

I would say, and this is one of the qualities

13:48

that I think is

13:50

kind of common among the companies that go

13:52

on to become big, they didn't hide that

13:54

stuff in the interview. They were pretty upfront

13:57

about it and that put the, you know,

13:59

the ball in our after the interview

14:01

to say, okay, there's a lot

14:03

of question marks here. Do we want to go

14:05

forward and fund it? And it wasn't the most obvious idea to

14:07

fund it based

14:09

on the interview. It wasn't like a slam dunk.

14:11

Oh my gosh, this is incredible. But the founders.

14:14

Yeah, but we were pretty impressed with the founders and that

14:16

they had the confidence to talk about the business and what

14:18

they're working on in that way. And we thought it would

14:20

be a pretty good experience. And one of the cool points

14:22

about that that I think a founder listening to this can

14:24

take away is that all of those things are in your

14:26

control. You can write succinctly if

14:29

you choose to. You can say

14:31

a little bit less than just the

14:33

highlights about your business if you choose

14:35

to. You can be very forthright and

14:38

very confident about what you have done and

14:40

haven't done if you choose to. It feels

14:42

like the best founders when they come to

14:44

interview, they don't pitch us. They

14:46

engage in the conversation, answer our questions like

14:49

as clearly as they can. And

14:51

don't try to hide anything. I think that's kind

14:54

of like the thing here. Yes, there's a classic

14:56

PG essay about how to convince investors where

14:58

I'll paraphrase this roughly, the most convincing way

15:01

to talk to investors is just to plainly

15:03

tell them what you're working on and

15:05

help let them build the model and understand

15:08

it themselves. That's what we want as interviewers.

15:10

We want to engage and get to

15:12

know the founders, understand who they are, what

15:14

they think, how they think. And

15:16

the only way to do that is to have

15:19

a conversation and not be the target of a

15:21

pitch whereas repeat stuff, have a stuff

15:23

that don't always make sense. Yes,

15:25

and with the Geeves founders, we definitely sensed,

15:27

all right, we had a real conversation with

15:29

them. There's only 10 minutes long, but it

15:31

felt real. It felt genuine. It

15:34

felt like an actual like working conversation. And we

15:36

think this could be a big thing if it's

15:38

successful. There's a lot of question marks, but

15:40

let's do it. A lot of

15:42

times, we as group partners

15:44

aren't totally sure about an idea

15:46

at the interview stage. It's

15:48

really about identifying these key traits,

15:51

the same ones we've seen time

15:53

and again in the most successful

15:55

founders. Next up, Serbian

15:57

Aran will talk to you about why...

16:00

you should avoid trying to follow

16:02

in the exact footsteps of successful

16:04

founders that came before you. A

16:06

lot of our early stage founders,

16:08

they look at these hyper

16:10

successful founders in their current state where they are

16:13

now, after they've had this success. What do you

16:15

think the risk is of doing that? Well,

16:18

I think that for founders

16:20

just starting out, they think

16:22

that the trajectory and the growth

16:24

graph of all the successful startups

16:27

looked like this, you know, just like

16:29

constantly up into the right. And

16:32

they don't see the early, early days when

16:35

they applied with a different idea, they had

16:37

no product, they tried something and nobody wanted

16:39

it. And so what you end up

16:41

seeing the stories that you read in the press and

16:43

in the media has this like

16:45

PR gloss over it, where

16:48

they're only showing the positives, only showing the

16:50

good stuff and not showing a lot of

16:52

the negatives and all of the

16:54

like super difficult times that they had to go through

16:56

in order to get to that point to be able

16:59

to tell their story. I like to

17:01

talk a lot about like when founders are going through

17:03

a tough time, imagining the story that they

17:05

want to tell in 10 years and

17:07

how boring it would be if everything was just

17:09

up into the right and successful the whole time.

17:12

Yeah, you wouldn't learn anything. Yeah, there was no

17:14

challenge, right? And so when you think of

17:16

those challenges, like it just makes the story

17:18

that much more interesting and memorable. I totally

17:20

agree. One thing that this reminds

17:22

me of is one of our more

17:24

successful healthcare companies, recent successes is called

17:26

Nourish, and they just close

17:28

a really meaningful series A from a brand

17:31

name investor and it's all over the news.

17:34

But they spent the whole batch

17:36

pivoting and even after, you know, they

17:39

pivoted five times before they found the

17:41

right idea. And now they're

17:43

taken off and the team was always

17:45

promising. The team was always great. But

17:47

yeah, it wasn't always roses. Truly,

17:50

legendary startups aren't

17:52

just born that way. They

17:54

are forged through difficult

17:56

decisions, uncertainty, mistakes and

17:58

pain. I'm proud to say the group

18:02

partners at YC are some

18:04

of the most experienced people in

18:06

the world at helping founders get

18:08

to product market fit. We

18:11

can do it not just because we've been

18:13

there, we can also

18:15

do it because we've directly worked

18:17

with more 0-1 startups than

18:20

anyone on the planet. Thanks for

18:22

watching and we'll see you on

18:24

the next episode of Office Hours.

18:30

Thanks for watching.