Every batch there are some groups that fall apart between when we agree to fund them and when YC starts. Sometimes we tell them not to worry about it and do YC anyway, and sometimes we tell them they should take some time to repair the damage and reapply for the next cycle. It depends on how bad the breakage is. If a team of 3 loses 1 person, that's no problem. Whereas if a team of 3 loses 2 people, that's bad.
In this case, the breakage was not only on the bad end of the spectrum, but we weren't told about it till the last moment. IIRC Jon told us an hour before he got on the plane here. That affected our decision more than the breakage itself. At the scale we operate on, we can't afford to have people around who aren't upfront with us.
I'm glad Jon got funded though. As he says, I was quite enthusiastic about what they were working on.
The problem is assessing who the critical members of the partnership are at that moment. I've met companies where the quiet, reserved hacker in the background was the real brains for the technical and business side of things. The other partner(s), while critical for adding that je ne sais quoi which the hacker required to be effective, were easily replaceable.
Some hackers just want to be Karl Rove. The problem with that is unless somebody tells you about Karl Rove, you'll think all the pawns he puts into place are the ones who are irreplaceable. They aren't, though you might mistake them as such because they are the public face of operations.
It's not common, but also not rare for teams to have the invisible Wizard of Oz who is really pulling the strings behind the scenes. Neither Ferrari nor Michael Schumacher have won much since Ross Brawn parted ways with them as technical director. Yet he managed to take Brawn GP (formerly Honda F1), which was a joke of a team, to both the Drivers and Constructors championships in its second year with him at the helm (first as Brawn GP). While even more variables are at play, take a look at the LA Lakers with and without Jackson as head coach. Then tell me how many people attribute Kobe to their success and don't really ever mention Jackson's name. Would Apple have been the same company (wait for it) had it not had Jonathan Ive?
I'm not quite sure how YCombinator would accept this business based on one co-founder and then dismiss them when he was the only one left. Not being upfront about things would definitely be a warning sign. But again, in his mind, you accepted the business based only on him. Why would it be such a big deal if the two other co-workers left? I've read some other comments about it being a vote of non-confidence in the business. Talk to 95% of employees in companies and probably 2/3s of partners. Secretly, they think the company is going to hell in a hand basket and will be dead or in serious trouble in 2 years time. It's human nature to be skeptical to the point of fearing a business' prospects; Maslow's Hierarchy and all that jazz. A startup doesn't satisfy very many of those levels... people get antsy.
Paul, thank you for adding your point of view, and I understand that it was a bad surprise to hear the bad news to late.
But if I understood correctly:
1. he was not planning on applying to YC, you asked him to
2. he had a good living situation and local contacts, and you asked him to move to SV
3. he had a functioning company wit income and co-founders, and you asked him to do something (move to SV) that blew up the company
As he makes all these sacrifices, in a very short schedule, you decided that you no longer wanted to fund him, as he turned up, suitcase in hand.
It is fine that you did not want to fund him into your group, and that you have well-tested criteria about co-founders.
But the guy made sacrifices for you and YC, and from what I understand, you / YC dumped him in the last minute.
To me, relationships are built on moments of truth. (Not my phrase, I heard it from the CEO of a health insurance company.) What do you do when things are going badly, rather things are going well.
Perhaps you are being modest, but I cannot see any mention of anything you did to help him, now that he was in a foreign city with no connections and no co-founders, trying to follow your instructions. "Apply for the next YC" does not count as help, and the ability to mention that you had accepted him previously does not count as help either (although I am sure he used it in his self-introductions).
Good on him for finding funding, and of course he is a good entrepreneur for picking himself up and continuing, and you are a good spotter of entrepreneurs for selecting him in the first place. But to me, this story does not reflect well on YC.
To be fair, the guy had to manage an unscheduled move from kansas to sf, including family in one week. At the same time he had to figure things out with the cofounders. In such a short timeframe, isnt it understandable that YC werent notified earlier?
To me, Jon seems to have demonstrated exactly like the type of resourcefulness YC asks for in its applications [1].
Unfortunately there was no way for YC to predict the Jon had these chops at the time. The fact that YC can make such predictions with high-accuracy, from simply an application and a 10-minute conversation, is very impressive. There are bound to be borderline calls now and then.
If you have de-identified application data, it would be interesting to know what early patterns in applications predict future success.
[1] Jon hustled his way into YC, found a way to make the move when his co-founders weren't willing to, kept the company running and profitable meantime, and closed a large seed round with top-notch investors, in perhaps roughly the same timeframe that he would have with YC.
In 2010, I got accepted and kicked out of Y Combinator, lost my cofounders, and raised $1.5M from A-list investors
Sounds like it was more "our team was accepted even though they had no idea what I was up to, I subsequently lost my cofounders, and Y Combinator revised their decision based on that."
I'm surprised that YC accepted "them" after meeting just one of the co-founders. Also, what is not very clear is why he went by himself to get money and how he continued the company by himself without his cofounders. Meaning that it sounds like it's just that they didn't want to move to SF with a week-notice, not that they gave up completely on the startup...
I came to SF the first time by myself because I was the hustler in the group. I talked to my team members every day. They knew I was in SF talking to investors and they knew I was interviewing for YC. They just hadn't heard of it until I was already doing the interview.
As to how I was able to continue, as I explain in the article, they spun off a t-shirt printing business that we had been running. It was a more predictable business. Less risky for them. More of a 9-5 thing with a steady income.
To be fair, they still believed in the business. They just didn't want to tattoo it across their face and sell their first born son like I want to.
I'm surprised that YC accepted "them" after meeting just one of the co-founders
This was the first time we had a late application process and I made the mistake of not insisting that Jon submit an application form. That would have surfaced the issues much earlier. We've since established that we won't fund anyone without them filling out an application form and meeting all co-founders in person.
Congrats to Jon, that's a fantastic list of investors to have.
I went through TechStars Seattle 2010. In watching the 9 other companies, it is obvious that the best predictor of success for my peers has been the strength of the relationships between co-founders. I'm measuring success (at this early stage) as some fuzzy function of how easy the team made it look to build a product, gain traction, raise money, and keep smiling.
I can only guess that Y Combinator really values co-founders because the patterns I've seen in 10 companies must be painfully obvious with 100 companies. That's not to say that there won't be outliners/exceptions, but when you're placing bets...
I'm curious in how things would have turned out had he not been kicked out of YC. My guesses are he probably wouldn't have been that much better off. My analogy for this would be the situation of a Harvard drop out. You've already accomplished the toughest task - getting ACCEPTED. Whether you graduate or not seems pretty insignificant since it's so much more unlikely for an average high school student to be accepted into Harvard, compared to an average Harvard student finishing the program he was accepted in. Ultimately he was able to demonstrate his ability to network and raise fund despite not completing YC. What I don't know is how much did having that YC stamp of approval (despite being taken away later) helped in those endeavors.
Edit: rephrased my question a bit, still seems awkward...
The article makes it sound that PG and co allowed this guy to pick up and move to SF only to tell him to suck it the next day.
If that is what happened, they deserve some scorn for playing with a person's life like that. That's just not on. If, however, they were clear about their reservations and just wanted to meet the guy again to discuss, it was really stupid of him to transport himself from his home to a hotel.
Such a cavalier attitude to risk actually might be a very good reason that this guy should not be running anything, and YC made a sound choice.
Either way, don't know any of the actors in the story and wish them all the best. Thanks for sharing this rather strange story.
"Such a cavalier attitude to risk actually might be a very good reason that this guy should not be running anything"
I read this story very differently. Jon was fearless, took a calculated risk, and, when the initial outcome didn't role in his favor, just kept plugging in the face of obstacles - to his success.
If you think that "Flying out to Silicon Valley on a reasonable chance that Y Combinator was going to fund his startup that already had a community, but with several months of cash regardless of that funding" is a cavalier attitude to risk, I would love to think what your thoughts about what some of the _really_ hair brained things that startups do to become successful.
The sheer _act_ of deciding to create a startup is easily one of the most risk prone acts one can take - so, ironically, per your logic, anyone who does so should not be running anything. :-)
I loved the story, loved how he rolled with the punches, and loved his positive attitude at the end towards everyone. I have almost no doubt that he's going to deliver great things.
It was more an issue of timing. The conversations started with my cofounders about 72 hours before the first YC dinner. I was already scheduled to move out of my apartment and had airfare booked. It wasn't until I was literally heading to the airport the night before the first dinner that I found out that things might be in trouble. I'd already spent the last couple days moving all of my stuff into a storage unit.
I talked to Paul on the phone as I was boarding the plane and he told me, "I don't know if I'd come out here just yet." But I didn't want to miss the first dinner (still naïvely thinking things will work out). He definitely gave me fair warning and I knew the risks, but it seemed silly to turn around at that point. I knew I could always fly back home in a few days, if I needed to. It was worth the risk. And in hindsight, I'm insanely thankful I got on that plane.
IMHO - one of the very best HN posts ever. no way for YC to be right about founders every time but the rejection feels devastating (we got interviewed then rejected for Winter 2010). But truth is that the vast majority of startups don't do YC or other incubator programs. Hustle, more than anything stands out as the factor that turned a rough situation into a success. good stuff Jon!
YCombinator has a very narrow niche for the kind of companies they fund. They reject many companies, not because they aren't good companies, but because they don't fit the YCombinator style. This isn't a bad thing for YC. Everybody needs to specialize. And it means there are plenty of good startups out there that aren't getting funded by PG/Yuri Milner.
"... Still, a couple hours later, I boarded a plane with my wife, dog, and all the necessities for the summer stuffed into a suitcase and flew to SFO and hoped for the best. Seven days isn't nearly enough time to find a proper housing setup in SF, so we checked into an extended stay hotel where we would end up living for an entire month.
The next morning, Paul emailed and arranged a meeting with the entire YC team for us to discuss the future of Storenvy in YC. Since we didn't have a car, and I didn't have enough time to figure out something better, Janette and I took a $100 cab ride down to Mountain View. ..."
[+] [-] pg|15 years ago|reply
In this case, the breakage was not only on the bad end of the spectrum, but we weren't told about it till the last moment. IIRC Jon told us an hour before he got on the plane here. That affected our decision more than the breakage itself. At the scale we operate on, we can't afford to have people around who aren't upfront with us.
I'm glad Jon got funded though. As he says, I was quite enthusiastic about what they were working on.
[+] [-] 9oliYQjP|15 years ago|reply
Some hackers just want to be Karl Rove. The problem with that is unless somebody tells you about Karl Rove, you'll think all the pawns he puts into place are the ones who are irreplaceable. They aren't, though you might mistake them as such because they are the public face of operations.
It's not common, but also not rare for teams to have the invisible Wizard of Oz who is really pulling the strings behind the scenes. Neither Ferrari nor Michael Schumacher have won much since Ross Brawn parted ways with them as technical director. Yet he managed to take Brawn GP (formerly Honda F1), which was a joke of a team, to both the Drivers and Constructors championships in its second year with him at the helm (first as Brawn GP). While even more variables are at play, take a look at the LA Lakers with and without Jackson as head coach. Then tell me how many people attribute Kobe to their success and don't really ever mention Jackson's name. Would Apple have been the same company (wait for it) had it not had Jonathan Ive?
I'm not quite sure how YCombinator would accept this business based on one co-founder and then dismiss them when he was the only one left. Not being upfront about things would definitely be a warning sign. But again, in his mind, you accepted the business based only on him. Why would it be such a big deal if the two other co-workers left? I've read some other comments about it being a vote of non-confidence in the business. Talk to 95% of employees in companies and probably 2/3s of partners. Secretly, they think the company is going to hell in a hand basket and will be dead or in serious trouble in 2 years time. It's human nature to be skeptical to the point of fearing a business' prospects; Maslow's Hierarchy and all that jazz. A startup doesn't satisfy very many of those levels... people get antsy.
[+] [-] idiopathic|15 years ago|reply
But if I understood correctly:
1. he was not planning on applying to YC, you asked him to 2. he had a good living situation and local contacts, and you asked him to move to SV 3. he had a functioning company wit income and co-founders, and you asked him to do something (move to SV) that blew up the company
As he makes all these sacrifices, in a very short schedule, you decided that you no longer wanted to fund him, as he turned up, suitcase in hand.
It is fine that you did not want to fund him into your group, and that you have well-tested criteria about co-founders.
But the guy made sacrifices for you and YC, and from what I understand, you / YC dumped him in the last minute.
To me, relationships are built on moments of truth. (Not my phrase, I heard it from the CEO of a health insurance company.) What do you do when things are going badly, rather things are going well.
Perhaps you are being modest, but I cannot see any mention of anything you did to help him, now that he was in a foreign city with no connections and no co-founders, trying to follow your instructions. "Apply for the next YC" does not count as help, and the ability to mention that you had accepted him previously does not count as help either (although I am sure he used it in his self-introductions).
Good on him for finding funding, and of course he is a good entrepreneur for picking himself up and continuing, and you are a good spotter of entrepreneurs for selecting him in the first place. But to me, this story does not reflect well on YC.
[+] [-] MortenK|15 years ago|reply
[+] [-] anmol|15 years ago|reply
Unfortunately there was no way for YC to predict the Jon had these chops at the time. The fact that YC can make such predictions with high-accuracy, from simply an application and a 10-minute conversation, is very impressive. There are bound to be borderline calls now and then.
If you have de-identified application data, it would be interesting to know what early patterns in applications predict future success.
[1] Jon hustled his way into YC, found a way to make the move when his co-founders weren't willing to, kept the company running and profitable meantime, and closed a large seed round with top-notch investors, in perhaps roughly the same timeframe that he would have with YC.
[+] [-] Timothee|15 years ago|reply
Sounds like it was more "our team was accepted even though they had no idea what I was up to, I subsequently lost my cofounders, and Y Combinator revised their decision based on that."
I'm surprised that YC accepted "them" after meeting just one of the co-founders. Also, what is not very clear is why he went by himself to get money and how he continued the company by himself without his cofounders. Meaning that it sounds like it's just that they didn't want to move to SF with a week-notice, not that they gave up completely on the startup...
[+] [-] NewMonarch|15 years ago|reply
As to how I was able to continue, as I explain in the article, they spun off a t-shirt printing business that we had been running. It was a more predictable business. Less risky for them. More of a 9-5 thing with a steady income.
To be fair, they still believed in the business. They just didn't want to tattoo it across their face and sell their first born son like I want to.
[+] [-] Harj|15 years ago|reply
This was the first time we had a late application process and I made the mistake of not insisting that Jon submit an application form. That would have surfaced the issues much earlier. We've since established that we won't fund anyone without them filling out an application form and meeting all co-founders in person.
Congrats to Jon, that's a fantastic list of investors to have.
[+] [-] scottkrager|15 years ago|reply
No co-founder....no soup for you!
To be fair, they did get accepted based on having the whole team.
Do you think you would have been excepted if you applied as just yourself?
[+] [-] snprbob86|15 years ago|reply
I can only guess that Y Combinator really values co-founders because the patterns I've seen in 10 companies must be painfully obvious with 100 companies. That's not to say that there won't be outliners/exceptions, but when you're placing bets...
[+] [-] NewMonarch|15 years ago|reply
- Jon (The guy who wrote this story. :)
[+] [-] jhrobert|15 years ago|reply
"What? they don't count as 'co-founder''? you must be kidding, this is XXI'
[+] [-] Supermighty|15 years ago|reply
[+] [-] physcab|15 years ago|reply
[+] [-] alexophile|15 years ago|reply
[+] [-] rokhayakebe|15 years ago|reply
[+] [-] ztan|15 years ago|reply
Edit: rephrased my question a bit, still seems awkward...
[+] [-] joshu|15 years ago|reply
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[+] [-] unknown|15 years ago|reply
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[+] [-] zackattack|15 years ago|reply
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[+] [-] dariusmonsef|15 years ago|reply
[+] [-] run4yourlives|15 years ago|reply
If that is what happened, they deserve some scorn for playing with a person's life like that. That's just not on. If, however, they were clear about their reservations and just wanted to meet the guy again to discuss, it was really stupid of him to transport himself from his home to a hotel.
Such a cavalier attitude to risk actually might be a very good reason that this guy should not be running anything, and YC made a sound choice.
Either way, don't know any of the actors in the story and wish them all the best. Thanks for sharing this rather strange story.
[+] [-] ghshephard|15 years ago|reply
I read this story very differently. Jon was fearless, took a calculated risk, and, when the initial outcome didn't role in his favor, just kept plugging in the face of obstacles - to his success.
If you think that "Flying out to Silicon Valley on a reasonable chance that Y Combinator was going to fund his startup that already had a community, but with several months of cash regardless of that funding" is a cavalier attitude to risk, I would love to think what your thoughts about what some of the _really_ hair brained things that startups do to become successful.
The sheer _act_ of deciding to create a startup is easily one of the most risk prone acts one can take - so, ironically, per your logic, anyone who does so should not be running anything. :-)
I loved the story, loved how he rolled with the punches, and loved his positive attitude at the end towards everyone. I have almost no doubt that he's going to deliver great things.
[+] [-] NewMonarch|15 years ago|reply
I talked to Paul on the phone as I was boarding the plane and he told me, "I don't know if I'd come out here just yet." But I didn't want to miss the first dinner (still naïvely thinking things will work out). He definitely gave me fair warning and I knew the risks, but it seemed silly to turn around at that point. I knew I could always fly back home in a few days, if I needed to. It was worth the risk. And in hindsight, I'm insanely thankful I got on that plane.
[+] [-] erichurst|15 years ago|reply
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[+] [-] Mistone|15 years ago|reply
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[+] [-] bootload|15 years ago|reply
The next morning, Paul emailed and arranged a meeting with the entire YC team for us to discuss the future of Storenvy in YC. Since we didn't have a car, and I didn't have enough time to figure out something better, Janette and I took a $100 cab ride down to Mountain View. ..."
Anatomy of determination.
[+] [-] jacques_chester|15 years ago|reply
[+] [-] jeffreyk|15 years ago|reply