For those that are soul searching, ask yourself a few questions.
Is our team credible; can we really execute? Do we have enough people with the right skills. Engineers are just more appropriate than english majors.
Will we see the project through… there will be lots of rough spots, will we give up?
If no, fix the problem and apply again.
Am I more than one founder? Solo founders are a risk. Something happens and YC’s effort and money is wasted. But probably more important, being a team is an effort multiplier and a barrier against stupid mistakes.
Find a cofounder or realize that you are probably not right for YC.
Is our idea unique? If yes, is it really something people want? If no, is it sufficiently better than what's out there. 10X improvement?
If you don’t have a good idea, get one.
So you have a good idea and you can build it. Can you get users? Where is the evidence? Passion for your project can blind reason.
Can it make money?
There are plenty of companies out there that are perfectly viable who received rejections. Who knows why - you didn't fit the YC mold, you didn't submit your application early enough, you’re a solo founder, you were too busy programming to correct your grammar mistakes…
if you were rejected because you can’t execute, have a bad idea, can’t get users or won’t make money, then you should really rethink your startup.
We built, we launched, we hustled and we grew. 12 months ago we launched a nationwide TV campaign. OpenRent[1] is now the largest letting agent in the UK (bigger than Foxtons for example), established, and well on the way to fully disrupting one of the oldest industries in the world.
YC rejection was tough, but we believed in the idea and whilst I'm sure YC could have helped us make fewer mistakes, it didn't stop us wanting to solve the problem we all believed in. So we went and did what it took to succeed.
Chin up to anyone facing rejection - use the information learnt from the application process, and go prove them wrong!
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Why? The San Francisco requirement was against my ideals that tech exists everywhere, and that's not how I wanted to build a company.
More so, the stake they required relative to funding was pretty huge.
I would now, to a degree, put YCombinator kind of in the same vein as Shark Tank in outside perceptions - allegedly that show takes 3% of your company whether you get a deal or not. Clearly, advice is offered for either winner, but the deals given out are often not as valuable as the "press" or label in that case.
While a lot of interesting companies have come out of that particular incubator (thanks for the forum, BTW), there's also a lot of business models that I consider on the edge of a bubble, and without the weird investment ecosystem that does exist in the bay area, I don't think many of them would exist. I say this in terms of valuations of what service the business provides to society, and how niche is is, versus "valuations" in the typical investment sense. What is valued is, I don't know, skewed in strange ways.
By all means, if you want to try to create a startup (which I do believe is not for everyone, or even most people), build things your own way if you really believe in the idea. If you can bootstrap things and avoid venture capital entirely, and be your own boss, even better. I'd advise thinking of it as a company from day one, rather than a startup, and don't think of funding as a way to get profitable. That means you'll be free of the venture capitol addiction at a much earlier time, and be in more control of your own destiny.
Probably the wisest words spoken regarding the startup business on HN for months. If you are not able to launch a company without external money, there are two possible reasons behind that. Either you aren't ready to build a company, or your idea is not worth your efforts and there was never an expectable RoI to begin with.
As an investor who thought Instacart, Uber and BufferBox were really stupid ideas and missed a chance to invest in them (Uber through AngelList), I know this possibility is all too real. :)
The only requirement is that you be in the bay area for the duration of the program which I think is essential because of the networking opportunities,office hours and dinners that you'll be attending in person.
So you have to be in the Bay Area for 3 months. After that you are welcome to be anywhere. If being in the Bay for the 3 months is not feasible, then just say so, or find something near you instead.
> More so, the stake they required relative to funding was pretty huge.
This is entirely dependent on what you currently have and what you hope to get out of YC. If you're just starting out, that 10% stake is worth approximately $0, so it's a good deal. If you're doing $5mm in EBITDA a year, then it's not. But to say that it's "pretty huge" without any context is shortsighted.
I think this was the deal in season 2. Cuban made them change it though & they fixed everything retroactively as he argued it would push away quality deals.
We kept pitching other investors for a while, then quit and bootstrapped the prototype by taking on consulting work. Pitching was hard and most APAC investors just wanted too much control for our comfort. Bootstrapping was actually easier than we thought, so when we got term sheets from local investors, we turned them down and kept getting consulting gigs (mostly data warehousing work - boring but necessary).
5 months later, and I think the product has gone into much more interesting directions without time and investor pressure than it might have otherwise, whilst we are closer as co-founders having worked together on the gigs and been through a few "client bumps". Some of the work actually helped clarify our own data model and understand our target market better.
It's quite freeing not to have a boss at last; I'd say that was the main factor in not taking money (the banker who thought he might "quit the bank and join you guys to help out with management" was particularly scary). But YC's terms - even excluding all the advantages that come with the network, coaching, reputation etc. - were by far the most generous and founder friendly, especially in their lack of protective provisions.
Not sure what this thread is for, but throwing the story in there since there are so few tales of bootstrapping and it's discouraged by PG in one of his money essays (he argues that it delays the launch). I think our story is most relevant for non-US-based founders who cannot as easily tap into the Valley money, and for more experienced founders who can command a high enough market value to make part time work.
- the brand is enormous. All my funding discussions have been warm intros or a network I built myself, slowly (same for client work with one exception). Saying "we're YC" enables cold emails to actually get read. Same as having candidates to a job ad from MIT, Stanford, Harvard... it gets them a phone call and some attention. It helps not just with funding, but with hiring and even B2B sales (I personally looked at Heap's product for a client and talked to their sales team, only because I heard it was YC funded).
- valuation, according to a better connected and experienced friend, jumps around 4x post-acceptance on any future funding rounds. Related to first point. If our valuation had gone up that much, the maths wouldn't work out in favour of bootstrapping.
But what makes it really special is the lack of control. For example, I went into the final stages (10+ meetings, legal docs being drafted) of a $400k round... for 30%, with veto rights on practically everything and someone injected into management. It was tempting, especially pre-launch, but would have guaranteed no further rounds and misaligned incentives between us and investors.
Even the <10% offers wanted things like vetos and RFR on any further funding round, that removed virtually all control we had, and would make it a lot harder to raise an A round when the time came.
This, I think, was the major innovation brought about by YC. We're far from the days of Georges Doriot and DEC...
(As an aside Terrence, since you're reading this - you American angels should pop over to other countries some time, valuations are much friendlier!)
Fix one of these problems for yourself and 99 times out of 100 someone will be willing to pay for it.
None. We never took YC seriously. We believe in our idea and we are very close to alpha launch and we don't need YC to succeed. We only applied to YC so we could have that media boost or the YC title attached to us. We understand why we got rejected, we had alot of plans and zero traction (because of how we built our strategy to get product market fit).
My advice to other founders: YC is just an incubator, they can only give you advice and introduce you to other founders and investors and give you ~100k in seed funding. You can get all of these things without YC. Infact, it's much easier outside. YC won't make you magically succeed if you don't have a great team or a great product, there's only so much they can fix about you in 3 months. So don't ever let that rejection get to you and keep focused on what you're building and keep evolving until you have product market fit!
So you got rejected? Good!
1. Now you know you KNOW you're on your own! 2. Next time you apply you will know that accelarator is not THE CHANCE to get to where you wonna be. Its just a SHORTCUT that you can take, or NOT.
Lately I have that feeling that people tend to approach accelerators like they approach Santa: "Dear Santa, I have been a flibustier all my life, and I have a bright idea, and I am really really smart. So please help me get my dreams come true..." Does not work.
If you THINK your idea is something that has to be done. Just go for it. Make it your mission and do whatever it takes to accomplish it. Once I met those guys from UK in Siberia riding their bikes. I asked em WTF? Well, they told me, they are on a mission to go around the globe on bikes.. Why? They had no clue, I had no idea, but they have done it. (find em "tough miles") Thats what a start up is, it may be even tougher.
(thats actually SCARY. Coz you will NOT have support from your friends, family, spouse and any reasonable person.)
IF you do it anyway, sometime you'll KNOW it works (coz you have clients and revenue and the growth). then YOU decide if you want to take the SHORTCUT or not.
Hope that helps. Listen to Iron Maiden - The Trooper There is always a chance.
Sincerely, Mike
PS: I will just go on painting Cathedrals to get the funding. Incorporte in HK. And launch my app for the HardHeads in July 2015:)
Markets are dynamic so ideas need to be dynamic as well in how we adapt to stay within the framework of the vision but be able to optimize the probability of success. Taking a step back and evaluating team, technology, opportunity and current execution plan takes a lot of time and effort which this process forced us to do.
It all starts with confirming that the idea is good and there is a real problem here to solve but once that is checked off, there are so many variables that come into play. My approach is to try and not dwell as much on why YC did not invite me but focus on what else I can do to fulfill the potential of the idea.
If we get this right, we might not need to apply again and should be on our way. If not we either come back bigger and better or will have decided that this is not the business we want to be in. All good outcomes right?
Very interesting that so many entrepreneurs - who by definition are bypassing gatekeepers - still tend to look at something like YC as a litmus for whether or not they can move forward or are a "success."
Obviously, there are some company models that need venture money behind them, but it's not an excuse for not doing your idea.
If your idea isn't inherently bad then just peel away away some layers of risk and try again.
So we never really expected to get in. We are both completely broke, so we're going to launch a kickstarter campaign to see if we can get the funding for more hosting (and the ability to work full-time over the summer). From there, well, I guess we try to grow and take over the world.
The way I see it, continue with your startup and apply again.
How do you know what you were rejected for? It doesn't matter. Either you were rejected because the assessment was it will not work, or you were rejected for a content free reason: 300 others were stellar, you weren't in the 300.
You don't want to know because you want to run the experiment. Any assessment pre-run is fortune telling, which adds zero content. Run the experiment, because the results, +ve or -ve, are valuable.
You don't need YC's or anyone's "approval" to become an oustanding success, or to believe in your idea.
The unfortunate truth I realized today is this: I believed "YC is the best." If they sometimes fail to select the best, that means they actually can't be.
If you believe in yourself, and your idea, as I do, then when someone says, "you and your idea are not as good as theirs", you choose to have a lower opinion of their judgement. And because you have a lower opinion of their judgement the image of YC becomes less than it was, which is unfortunate.
So getting a rejection is unfortunate, because it's a compelling idea that there's really a place that "gets" all the great ideas, and where all the quality founders can mingle.
The thing I realized is this is a fantasy. As good as YC is, if they decline your proposal and you and your idea work, it's not what you're looking for. That's tough, because it's nice and comfortable to think there's a "destination", beside your business, where you can go and meta-discuss all the things about your business around people who embody the traits you respect, and who are creating the successes you admire.
Maybe my idea and me really don't work, and I'm just blind to the ways in which they don't because I don't have the perspective YC has. That's a possibility. I don't believe that's likely, and I choose to believe in myself and my idea.
Even so, feeling like an outsider to this "magical world" of YC is tough. Especially when you spend 40 days through the application period mentally aligning yourself, and convincing yourself that this is really somewhere you and your idea belong. The adjustment period when they say, "no it isn't" takes some getting used to.
But more shocking than this personal readjustment is realizing that actually, no, there is no special place out there that is made just for me and my startup. That's tough, because it's nice to think there is that. Tho for every person for whom that is now a reality, 98 others it's not -- and that's a lot of pain.
My conclusion is really that YC is not that important. It can't be, because there's still so much talent outside it. It's just an image of importance that emerges when any concentration of talent occurs. It's nice to think there's a "leader" there's someone to "guide you", and yet in reality, it works to guide yourself. As people making things, we're the ones who are creating something new that didn't exist before.
That's pretty much the definition of there not being a "destination" or a "point man" for us. We're out the front, ourselves.
To all my other people now 7% (and in numerous other ways) richer, onward!
To everyone who's getting in, I feel a little sorry for you -- because they can't be as good as we imagined because there's so much talent still left on the track.
For my part, I'm happy to be in the bigger, wider world, than in a narrower one. As I read my mail this morning, a strange sense of relief washed over me. Now I can do this thing my way, at my own pace, and not worry about tracking it through a 3-month hot house, which I'm sure feels like a great opportunity, and it is, tho as for that, I'm happy on the road I'm on.
This came to mind:
two roads diverged in a yellow wood
and sorry I could not travel them both
and be one traveller long I stood
and looked down one as far as I could
to where it bent in the undergrowth
.
Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,
.
And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.
.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
.
Robert Frost -- not of YC ;)
“If you’re absent during my struggle, don’t expect to be present during my success.” - Will Smith
In my view the way YC has been openly crushing morale of solo-founders for years is simply pathetic. Is it a crime to be a solo-founder? Despite equal number of successful startups from solo-ists, they continue to snub the potential and rather host even those who would easily rip-off ideas and interface from others.
Given that they are almost a monopoly and monopsony "middleman" of all things startups and nearly control other movements (media/VCs/other stakeholders) I see this as a dangerous precedent for startups in general.
Last thing we want is an Amazon-like agent that controls our destiny.
I feel your frustration that they don't fund certain things, but this should not be called crushing morale.
Please remember one thing: the reason YCombinator is a monopoly is that others are cowardly, don't know how to invest at the seed stage and help founders build huge, scalable businesses with a community of awesome people around them. This community is a hallmark of YC, and one of the obvious things that must be true about any founding group that has at least 2 members is that by definition they are social enough to keep a group of at least 2 cofounders together.
If you feel YCombinator is a monopoly you have to please by having a cofounder, why don't you get a cofounder?
The entire process is rigged against solo-founders and you CANNOT deny that fact. Even your own last sentence in the end contradicts you.
> why don't you get a cofounder.
Dude what about this: I don't want to marry. I do not want to own a house. I do not want a co-founder.
Being a solo founder represents added execution risk, particularly in the early stages of a startup -- which coincidentally, is precisely where YC funds most companies. They aren't the only party with this bias either. Downstream investors share these concerns, and when you add financing risk to execution risk, you start to get the picture.
Of course, all of this can be overcome as a solo founder, and YC does fund solo founders at a roughly 1/10 ratio to co-founded teams. However, it usually means de-risking yourself in some other area (i.e show tons of traction, have a proven track record, already have an exit, etc).
It's not a crime to be a solo founder, and plenty of great companies get built that way. Just understand that without the above, you may not have a venture-fundable company.
I disagree with you here. Sure, rest of the bay area sucks even more, but YC (being the frontier) can't get away from its terrible karma here first.
(the wrong reasons to want a co-founder:) Yes, it's true that startups with only one founder are more likely to fail. But it's due to signaling: if you, as passionate about your idea as you are, can't even convince one more person to join you, how will you get users excited to download your app, get investors excited about the market, and get Microsoft and Coca-Cola to partner with you?
Solo founders usually fail because they are bad at convincing anyone of anything.
Without any data on usually vs. unusually a debate is lost anyway! FWIS there are enough stories of successes from solo-founders to contradict your theory - flat on its face.
> can't even convince one more person to join you
... is not the same thing as don't want another person in the founding team. I still do not see how that 10 year old logic of a co-founder must-have is going to hold good in the coming next 10 years. I may individually fail but times for startups have changed, haven't they?
Also it is still a bad deal for most entrepreneurs (especially those who are outside) to let YC become the fulcrum of startup destiny - for it has almost become a monopoly and a monopsony as I'd mentioned earlier. It doesn't matter whether YC likes it or not.
