<human>: There was no growth hacking.
<bot>: There was no growth hacking. They just had a website. And they got millions and millions and millions of people to go out of their way every day to open a web browser and go there. And they have  tens if not hundreds of millions of daily active users now. They make something like half a billion dollars a day on the ads on their website.  And again, like if you think about them when they were started, let's zoom into that, they spent no money on user acquisition, they did no branding, they did no marketing, they just built a really good product that people really wanted.
<human>: Not only did the people want it, like the people evangelized it. Like my roommate in college saw me not using Google and like scolded me and said, you're using a bad search engine, you gotta use Google. Like that's way past like liking something, right? It was obviously bad.
<bot>: And famously,  The product was so good, the founders didn't really wanna run a startup. They tried to sell the technology. They tried to get Yahoo to buy it. The founders were disinterested in running a startup, but people wanted their products so badly that they got pulled into it. Isn't that weird? And again, this is the sign. This is the bar for a lot of these consumer ideas, is you make something that people are so obsessed with and is so high quality,  You don't have a choice, basically. You as a founder get pulled this direction that you weren't even sure you wanted to take. That's a sign of a pretty good consumer idea. That's a pretty good bar if we look at Google in historical context.
</s>


<human>: You had some thoughts on when a launch goes bad.
<bot>: Yeah, I mean, I think a lot of folks think that launches will be like the movie. Again, I think we can't help but be influenced by television and movie and books.  Actual an actual realistic movie that showed a startup Would just be like people sitting at their keyboard typing all day and not talking probably would be with like lots of that Punctuated by pretty boring conversations, but that's not that's not good in a movie And so so anyway, I think this translates to how people thinks a launch will go where they think they're gonna launch  and everyone's gonna care and like things will happen to them and like you know like they have a movie in their head of all these like amazing things happening and all these users signing up and the reason it's really good to launch fast is to get that shit out of your head as fast as you can and realize you put it out and no one cares whatever you thought like you this movie that you had is not realistic and what actually happens is like no one cares and sometimes they care a little and sometimes they care  but in a bad way, and they're like, you're bad, and this idea is bad. And you're like, but I launched, and everyone's like, this is bad, and you should feel bad.
<human>: And you're like, this isn't the movie. I was promised a movie here. I love that, because it's like two levels worse than you can imagine. Bad is no one cares. Worse is everyone hates you.
<bot>: People on Hacker News are like, you should be ashamed of yourself.  and you're bad and all of your ideas are bad and...
<human>: I could have built this in three days.
<bot>: Startups are dumb and you're wasting your time. It's not great. And so again, the good thing about launching is you flush this out of your system. You're like, yeah, okay, cool. This isn't like the movie. This is real life. And here in real life, you put out a launch and most people don't care most of the time. And you just have to keep launching over and over and over again. And that's the work. Right?
</s>


<human>: Whole new industry, basically. No, I think that what's cool is that  We're also talking about every scale, right? We're talking about things that can be venture backed, maybe billion dollar companies one day. But we're also talking about things that can just set you up so that you can pay your rent and live a good life. The opportunities are across the entire spectrum. And I think that's what's really cool about new technology. When there's a real technology shift, it affects businesses across the board. We're not just talking about  Companies, why is it even fun? I think that the last point I'd want to make on this front is that you don't get this opportunity if you're just thinking, you got to actually do.
<bot>: Well, and they won't teach you this in schools. Schools teach you stuff for 10 or 20 years ago. So the other thing that I've noticed in these trends is that when you are part of the history being made and you're this early on the cutting edge of a new tech coming out,  You can't expect your university, or your teachers, or people in your community, or your peers to teach you about it. It's only basically weirdos on the internet. The only way to find these opportunities, learn about them, is to find weirdos on the internet that are also into this thing. And they're figuring it out too, and you can kind of compare notes. And this is how new industries are created. Literally.
<human>: By weirdos on the internet, like literally. Yeah, literally.
<bot>: There's like some subreddit with a bunch of weirdos. And like, some day from now, you know, 10 years from now, there'll be an entire industry of people that learned about this thing in some subreddit somewhere.
</s>


<human>: All right. So let's say you're in that first category. Let's say that you have expertise. You're solving your own problem.  You've done something that's created value, either for a lot of people or maybe even just a few. How should you think about the challenge of bringing a product to market slightly differently?
<bot>: Yeah, I think we would argue that if you were inside of a company, you built a tool, everyone at the company uses the tool, it's still being used even though you don't work there anymore, you probably know more than you think. And that it's probably okay to trust your gut more than you think that you do understand a problem or that you have a unique insight. You've developed some taste.  Yeah, and to the extent in other aspects of your life, say you built consumer products, say you built an iPhone app that was pretty popular, and you've gone through that whole thing, and you have an idea for a new iPhone app, well, I think you might, you understand what it takes to build and launch one of these things, and so you might have, it might be a better idea to follow those instincts a little bit more than thinking you have no, having no confidence in your instincts at all. And so the more,  you've developed this expertise, the more you can self discern that other people validate that things you've done in the past are good. It's not just in your own mind you're an expert.
</s>


<human>: Well, and I would argue it is so distinguishing that you're given amazing opportunities.  But what's tricky is not only do people not see this or do people  try and not get a technical founder.
<bot>: Or they just dismiss it out of hand. It's too hard. They'll just kind of shut this line of thinking down.
<human>: That's what's even more common. It's just they're like, well, I can't find this person, so I'm just going to move along. I don't know anyone.
<bot>: Yeah, I don't know anyone. OK.
<human>: And this is the crazy thing, because a lot of people will pitch this to me. It's like, but this is the true spirit of an entrepreneurialism. No barrier can prevent me from getting my product to market. I couldn't find a technical founder, so I just moved to the next challenge. I hired some engineers, or I got a dev shop. And nothing will keep me.  will hold me back. And what's so sad about that way of thinking about it is that like, one, the percentage chances of death just went through the roof, right? Like you've just completely reduced your chances of success. But two, I bet if you would put the same amount of effort you put into getting a product to market without a great technical founder into finding a great technical founder, at least half the people would be able to do it.
<bot>: Yeah.
<human>: And so it's just like, it's a shame because it's so much wasted talent.
<bot>: Yeah. I like to think about it this way. Again, what we're talking about implicitly, let's make it explicit. We're talking about a company that uses software as a deep part of it.  So if we're talking about a software startup, and you somehow don't have a technical co-founder, this would be like, I'm going to build a rocket to the moon, but no one here knows anything about physics. I have such a big heart, we can just be like, I have such hustle. I'm Johnny Hustle. I'm going to the moon, Michael.  Like, do you see how absurd that is? And the asterisk is, okay, if you want to start a new clothing brand or a liquor brand, okay, you don't need a tech co-founder.
<human>: This doesn't apply to you.
<bot>: But if you're saying, yeah, I'm going to build a software company and you don't have a software co-founder, you're not even in the ballgame.
<human>: You're not even in the stadium. One, what's so sad for me is when I say that to people, sometimes they think I'm trying to discourage them.
<bot>: But if you go back to that, they're like, I'm going to prove you wrong, Michael.
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<human>: So everyone listening has got to ask, well, aren't we VC's? Right? Like, isn't this how a YC partner would think when reading applications, collecting interviews?
<bot>: I think that's an excellent point. Here's the facts. When we are reading applications and doing interviews, we are investing very, very, very early. And we have been trained on what matters and what doesn't matter. And so let's be real. What matters is, does your idea make any sense?
<human>: Yeah, any sense.
<bot>: Do you know anything about it?
<human>: Yes.
<bot>: Do you have the tech skills to build the thing or anything? Anything, basically. And can you get any customers? Yes, it's almost, it's so basic, it shocks people. What we are looking for is very basic stuff.
<human>: Well, and I think what's interesting is that when we try to be smarter, we make mistakes. Correct. When we try to be smart about markets or when we try to be smart about comps, we make mistakes because one, we haven't studied those markets closely, and two, because startups change, they pivot, they find new opportunities, technology changes, time changes.
<bot>: Well, think about it. When we make an investment, often it does not become a big company for at least ten years. And so if you're trying to do market analysis and market trends for an investment that won't become big for a decade later, it's kind of flawed analysis versus if you're doing analysis of new ipos coming, you're much closer to that coming to market. And so I'm just arguing this is completely valid analysis, but that is not useful when applied to a startup with no customers, with no product, that's not even sure what they should be working on. These frameworks are not necessarily helpful.
</s>


<human>: I love optimism also comes in the form of hiring. We have this really big, hairy, kind of awkward problem we don't understand well, but if we just hire a  marketing person, a salesperson, a this person, they will come in and solve the biggest problem inside of the company, especially pre-product market fit. Like they will figure out what the product should do or how people should find out about it. And what's weird is that like, it's not like, oh, they'll help you or together you'll figure it out even. It's that no, they'll do it. That's why you hire people.  That's the way too optimistic. And it's too optimistic on multiple fronts. One, the idea that your employees just hand you that. And two, the idea that even if there existed people out there who could, you could hire them in your pre-MVP startup or pre-product-market-fit startup. Why would the number one marketing person in the world work for you?  At this stage, they probably would. And the last one that I come up with on the too optimistic front that I see a lot is this is obviously going to work because it's the cool thing.  because it's the trending thing, because the thing investors are talking about on Twitter, I should obviously work in this category because it's the hot category. And probably one classic example, how many remote startups and video conferencing startups did we see the second that COVID hit? And the thing that was so sad was having to explain to people  Zoom was working for years before this moment, so they could take advantage of this moment. They have years head start, technology start, all these advantages. Not that they expected COVID would come, but they were in a prime position for it. You starting from scratch after COVID comes,  you're optimizing for something that probably happens post COVID, not something that's going to happen in the next three to six, nine, 12 months. And I think that oftentimes founders, you know, there are a lot of fads that way where a founder basically or people get in at the end and think that there's a lot to get when like the reality is that  You wanna get in before everyone thinks it's cool, not at the peak of everyone thinking it's cool. The peak of everyone thinking it's cool is usually right before everything goes to shit.
<bot>: We sure see this a lot at YC, where you can tell when something has jumped the shark, when it is one of the more common ideas people apply with. Like, remember chatbots? Everyone was building a chatbot for a couple of years there. And that's when you knew it was over, basically.
</s>


<human>: Yes.
<bot>: That's what the midwit meme is. And a beginner's mind is like, I guess I'm gonna build a product and I'm gonna give it to people. I guess I'm gonna deliver burritos, you know? Yeah, that's a beginner's mind approach.
<human>: Yeah, that's the game. And so you might find yourself, after watching this video, asking yourself, what do I need to unlearn?
<bot>: Yeah, how can I have a beginner's mind? Because, again, this is the beauty of the midwit meme, is the genius and the idiot come to the same conclusion. So what is the idiot approach? Like? That's actually how you can divine the genius approach is you're like, what would an idiot do?
<human>: Everyone can reach for the idiot approach. Everyone has the intellectual capacity to reach for the idiot approach.
<bot>: If I didn't know anything.
<human>: So with all that being said, have fun and don't overthink it too much. Don't overthink it too much and make sure that you have a little bit of something in your head that's asking yourself, is this the thing that's really important? If not, I can move on. If not, I can move on. All right. Thanks so much, Dalton.
<bot>: Thanks.
</s>


<human>: All right, next. And here's kind of a classic one. Is product market fit. Dalton, do I have product market fit and how. What's the midwit approach to product?
<bot>: Yeah, the midwit approach for this one is to be not sure if you have it and create 15 different metrics and, like, a complicated series of thoughts that maybe you have it or you have early product market fit versus the extremes on this meme. Early project silence got early.
<human>: Yeah.
<bot>: The extremes of this are like, am I overwhelmed with demand? Like, you know it when you see it. Like, you don't have to think very hard when you have it. It sort of, like, hits you over the head when you have product market fit.
<human>: Dalton? I think the extremes in the meme is like, did I sleep last night? It's like, I didn't sleep last night.
<bot>: Do I have time to wonder if I have product market fit?
<human>: That's.
<bot>: Yes, if you have time to wonder about it. If you're like, gee, do I have product market fit? Let me. Let's pontificate on this. That probably means you don't.
</s>


<human>: One of the questions that I love getting from a founder is, before we launch your mvp, how do we know we're going to be able to survive the onslaught of traffic and users that will come on our launch day? What's midwit? What's the midwit play? What's the midwit meme for your mvp?
<bot>: I mean, yeah, the. The two extremes, the midwit meme, are launch something fast, build something fast, and put it out. And the midwit one is like, well, I don't want to get a bad reputation that my thing was buggy, and we only have one shot to launch. And, you know, like, you.
<human>: What about the press? We got to do a press launch. It doesn't have to be an event.
<bot>: Yeah, I don't want people to see my idea and copy it. So it's got to be perfect.
<human>: Yes.
<bot>: That's why.
<human>: And then do we. Do we do, like, a Techcrunch post, or is it better to try to get the New York Times? Or, like, what about hacker news? Yeah, we need to get all three. So how do we coordinate them together?
<bot>: We want it. We want to be featured in the New York Times, and so how do we optimize for that? Or, oh, what should we name the company? How about, I don't.
<human>: Yes. We have to rebrand because there's a name that's kind of similar to ours. We don't want people to be confused. How about co founders? I hear this a lot. Like, I am a business person and I'm good at sales. I need to find a marketing co founder and an engineer, like a CTO who's already managed 50 people, because we're going to grow fast. How does co founders.
<bot>: It's like, yeah, Dalton, I'm open to the idea of a co founder. I just haven't found the right person. And what I really am looking for is someone with at least five to seven years of experience at Google who made it to at least a level seven. And so, you know, I haven't found the right person yet, but we're looking for it.
<human>: Yes. When we find them. I'm totally open to bring out a co founder when I find that one.
<bot>: But first, we're going to raise money, and then I think that'll attract a better co founder.
<human>: Yeah. Yeah.
<bot>: So, again, the point we're kind of making is not that any one of these ideas is the one people say. It's that it's thinking in circles and having a thousand different reasons that it's that the person that should be your co founder is no one that you currently know.
<human>: Yes. Yes. And let's talk about the other sides of the equation. Right? On the dumb side, the founder's like, it's fun to work with my friends, so I'm just gonna start on the smart side.
<bot>: Justin Kahn likes to put a camera on his head, you know? Let's go, let's go. This is our guy.
<human>: Like, we were drinking buddies.
<bot>: Why did they pick you? Is your. Is their co founder? Wasn't it?
<human>: Like, well, because I helped them find an apartment and open.
<bot>: There you go. This guy helped us find an apartment. All right. He's the co founder of twitch. Done.
</s>


<human>: So if we think about this conflict, right, why do they love YC? Because we can kind of package companies for them in a much better way. And because YC companies tend to be further along than the average company walks in the door, and more technical than the average company walks in the door. Why is that love secret? Because all things Amiko, of course they'd rather be the first check. Yep. And they know if a company does YC, they won't be the first check. So it's kind of a really tricky game. What about seed funds? How does seed funds kind of play in this dynamic?
<bot>: Yeah, I mean, again, they want to be first checks. They have various ways where they want to meet with as many companies as possible. Maybe some of them have a thesis, but essentially they want to buy ten to 20% of a lot of the companies, which is completely not compatible with a company doing YC. And so it's much more of a zero sum situation where any kind of content marketing or viral memes you could put out about YC are essential if you're doing a seed fund, because your job is to be, is to get a big ownership in the company and then try to get the VC's to fund them the next round.
<human>: Yeah, I would say that seed funds are also more limited than traditional VC funds because if a VC fund misses your a, they can still do your b or your c, whereas your seed fund kind of knows their primary opportunity to invest in you is at the first round or.
<bot>: Yeah, they can't catch you in the next round.
<human>: And they also know that from that round forward they're probably diluted. And that's why they try to get as big of a chunk at as low as a price. I think seed funds, we could have given numbers for seed funds. They write thousands, tens of thousands of checks in YC companies. But the reality is that when they write those checks in YC companies, they're at higher prices. You can't blame seed funds for saying we don't want you to do YC. When, if they find you outside of YC, they pay five to $10 million price free evaluation, and when they find you after demo day, they pay a $15 to $25 million price. You can't blame them. But I think as a founder, you need to understand these dynamics. Right? Like the people who are marketing to you are running their businesses, and those businesses have dynamics. You understand those dynamics. We're running a business too.
<bot>: Right.
</s>


<human>: So let's start with the maker mode. You were a developer in your startup. I was a business guy in my startup. I think, in many ways, this stuff came a little bit more natively to you. And I had to learn this stuff by basically destroying the productivity of my co-founders. So how did you think about maker's mode as a founder?
<bot>: Most companies  are set up around a manager schedule where you have a day packed with meeting after meeting. And so if you're a programmer at a big company, you would have to  you'd have like an hour to program here, an hour to program there, and this is bad. This was not conducive to building things. And so to just walk through my perspective as someone that was programming back in the day when I was a startup founder, when you're programming, the more of the program you can keep in your head at any one time,  the easier it is for you to know what's going on and have the context up here to make changes and fix bugs. And it takes like an hour or two, cold, of looking at a program and figuring stuff out for it to get loaded into RAM, so to speak. And so if you're interrupted,  Like if you have to program in hour increments, man are you gonna suck. Like you constantly have to restart your state every time you program. And so a great maker's schedule is something like an eight hour uninterrupted block of time. And his argument, I think he was also talking about this from the perspective of an artist or a musician. Like if you wanted to record an album or write music or if you wanted to write a book, same deal. If you had to write a book in 20 minute increments,  I think a lot of writers wouldn't love that.
</s>


<human>: Well, and this touches on the next subject, which is co-founders. Because, you know, this is something that I definitely experienced, you know, my co-founders are reading TechCrunch, watching idiots raise tens of millions of dollars every day, and then looking at me as the fundraiser being like,  hey, Mike, what's going on? Like, there's a couple of idiots with no products just raised 10 million from, you know, dot, dot, famous fund. Why is our series A taking this long? And man, co-founder fights suck. You know, co-founder disputes, they are the, in some ways I think it rocks you to your core more than  investor issues because that's your home. When your home feels broken, it feels bad. At YC, we encourage people to do startups with their friends. And I think that a lot of people think about that and they say, well, that seems so risky. If my startup doesn't work, won't my friendship break?  And we always talk about the other side of that, which is like, if you don't have a strong relationship with this person, when things go bad, it's guaranteed to break. At least if you have a friendship, there's a fighting chance.
<bot>: Every co-founder relationship is always tested, right? And so you wanna have enough connective tissue that you can survive the inevitable friction. And to think that there will never be friction, that's not, again, not realistic. And so you actually wanna have enough of a relationship so when the inevitable friction happens,  there's still a relationship and it's not just like, boom.
</s>


<human>: So I think that is the first thing is this bar. Let's talk about timing a little bit here. Cause I think that you and I were fortunate enough to do startups  during kind of two big, let's say, kind of explosions of consumer products, right? Web 3. I'm sorry, Web 2. That was a Freudian slip. Web 2 and mobile. And so,  Why was it easier to make a consumer company in 2005, 2006, 2007, or a mobile company in 2010, 2011, 12, 13, 14? What was happening?
<bot>: In the 2000s, a lot of people had gotten broadband and they had gotten computers and they were bored. If back in that era, you just launched something cool, people were bored and you were basically competing with television or something. And so again, when you think about when Facebook came out, they weren't competing with attention from a bunch of other social networks. They were competing with nothing.  And so these college kids on the campuses back then, it was like crack how addicted people got to this thing. And they would have people using them multiple hours a day, looking at everyone's photos, leaving comments, poking and liking. It was like so addictive because there was nothing remotely competing with those hours for the day.
</s>


<human>: And so the counterintuitive advice we're giving is basically, forget your fear about it being consultant early. Dig in with some customers. Actually solve their problem. And in the process, maybe you're building some stuff that's one-off, but you're going to learn a ton about the actual problem.  And then you'll have some insights on, okay, what's more generalizable? What can I do that I can give to everyone?
<bot>: And ideally understand the levers in their business.  that derives economic value. Like basically like don't make assumptions that you think you know how they make money or should make money. Yes. Kind of test those assumptions. And once you have a better mental model that it's much, it's much more clear how you drive economic value.
</s>


<human>: Let's put this in historical context though, because this giving before you receive is not new.
<bot>: Yeah, this is a whole broad topic, but just quick crash course. The history of computers involves giving away a lot of value for free. Specifically, the original business models of computer companies were to sell hardware, and software was like a thing you had to give the customer to run the hardware to get value from it. And so historically, software was just free and not really proprietary.  And this is beyond the scope of this talk here, but if you research the history of Microsoft, people in the audience, Bill Gates kind of pioneered the guilt trip to get people to pay for things. I don't know, go read his letter. I'm not going to do it justice. But the idea of proprietary software and charging for it was like,  It came out in the 80s. It was an innovation in the 1980s, maybe the late 70s. And before that, there was the free software movement, which equated software and code to freedom. Many of the tools that power everything to this day were created by hippies, created by people with big ideals, created by people that wanted to give more value than they receive. So if you look at the history of GCC, of all the compilers, if you look at Linux, the Linux kernel, if anyone runs an Android phone,  That's all free software. There'd be no Google, there'd be no YouTube without Linux powering all this stuff. The same would get like every web browser, Gecko, KHTML, you can research these things. Also, SQlite is this free database that's in everything. Like I'll bet to just watch this video stream, SQlite is involved like 50 different ways. How many free products do you actually need? And so,  This is part of the history of software and computing and technology is to give out all this value and realize the value that it's created can create enough economic value for the creators, for the people that make this stuff, and also just  unlock more value in the world than what they charge. And this is why the graph of how technological progress is accelerating so fast is this factor of giving more than you receive.
<human>: And if you take some of their inspiration when you're building your products, maybe you can have some wild success.
<bot>: I think that's the game. If you leave a lot of the value on the table for your customers, instead of trying to take it all, then you're in the game.
<human>: And the key, let's be clear, is  your product actually has to solve the customer's problem. It all comes back to all those free products, all the products people pay for, they actually solve the customer's problem. And so if you can do that in the early stage, instead of being afraid of consulting or afraid of fundraising, bam, you have an advantage. All right, man.
<bot>: Great.
</s>


<human>: So the other thing that comes up a lot is this concept of the magical deal. And I always love the magical deal because like the magical deal can punch you in the face when it doesn't happen. And the magical deal can punch you in the face when it does happen. Because it turns out it's not as magical as you thought. Our first six figure advertising contract with Microsoft.  which we were like, oh man, this is it. This breaks open our entry into the monetization game, which required us to redesign our entire site.  go to L.A. and produce a live television show, lose way more than $100,000 of money, the show wasn't very good, and complete waste of time and effort, like literally three months of our lives down the drain. And if we think about the burn we had during that period of time, let alone we didn't make money on the advertising, the burn in the wasted opportunity.  And to me, it's like, wow, but at the moment, we were like, these are the deals that will save the company. Like, this is the most important thing happening.  You see that a lot, right? The founder is like, this is the magical, here's the potion. This is what's going to fix it.
<bot>: Yeah, I think it's that you reduce your entire startup to you just need one thing to happen and then you're on easy street. I always picture, you know, at the end of the movie when they roll credits, you know, like something happens and then like the music plays and they, you know, roll credits, like we won. Like I think people think that's how life actually is. Yeah.  And they're like, yeah, well, once I get this deal, roll credits. And what's funny working with a lot of startups and when I was a founder is sometimes you'd get the deal and the credits don't roll. You're like, oh, now what? I'm still here.
<human>: I thought the movie was over.
<bot>: And then you're like, shit, I guess, I guess we actually have to like run a startup still. We got into YC, Michael, like, where are we rich? Like, are we, we won, right? We're successful. We have to, we have to break this news to people all the time. They get into YC that like, it's still hard.
<human>: I love that too, because I think founders,  have this thought in their head that that moment is gonna be in the first two and a half years. The play the credits off, it's all inevitable from here, will be in the first two and a half years. And we talked to so many alums who are like eight to 10 years to their ridiculously successful companies. No music, no credits. Public companies, no credits. The whole- They're still doing it, and it's still the same problem.
<bot>: They have setbacks. Yes.  Like, it's no fun. Like, these people have a hard time. Like, they have constant setbacks.
</s>


<human>: This is Michael Seibel with Dalton Caldwell, and today we're talking about how to break out of fame. I think almost inadvertently, because we talked to so many young technical people, young technical founders and potential founders, we've become experts at career advice, and specifically big tech career advice, which I don't know about you, Dalton, but it's not an expertise I ever wanted to develop at all.
<bot>: Yeah, I mean, I've never worked at a Faang. Like this is probably the last thing I'd be interested in talking about with people. But man, we get exposed to lots of this stuff.
<human>: And I think what's interesting is that technical founders often misunderstand the value they can get out of Feng. And misunderstand is an understatement. They grossly misunderstand what value they can extract from a Feng job and what value they can't extract. I think mostly because a lot of founders are mixed in with other people with different motivations, right? Most people want to be managers or employees.  I think a lot of founders have friends who want to be managers, employees, and they kind of like see those people attracted to Faang and they assume all those things apply to them as well. Whereas, you know, as we both know, the founder path is quite different than the employee path. Yeah, it's funny.
<bot>: I remember when I was an undergrad.  A lot of the recruiters, the people that had the most recruiters and the best recruiters, tried to create cachet. I remember when I was in school, it was all around management consulting, was the high status, cool jobs to get.  It was a certain kind of person that would fall for that, that working at McKinsey or Accenture or something was the cool thing to do. And what's funny is, at the time, Google was an 80-person startup, and they were trying to recruit on campus. But it was like, do you want to be different? It was exactly the opposite brand of what Google is now, because it was just kind of a grubby little startup. But the point is, it's easy.  It's easy to look at folks that employ the most recruiters, and use that as your basis. Like whoever has the best booth at the career fair, whoever gives out the coolest stuff, and make your selection that way, right? If that's the criteria you use to select what college to go to, which is like, oh, whatever has the best rankings, you look at the best career rankings for where to work after college, and that's gonna drive you towards  You know, Google, Facebook, whatever, right? It's not crazy.
<human>: I get why this happens. And if you want to be an employee or a manager in a large tech company, that's great. Like, that's correct. In fact, I'd argue all those guides are written for you. And it makes sense to write guides for you because you're the vast majority of people.  The problem is, what should the founders do? What should the potential founders do? What should the future founders do? How should they be different?
<bot>: Yeah, people that are curious, founder curious people.
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<human>: Facebook is extremely similar. I believe the stat was within 48 hours of Facebook being released at Harvard, 75% of the campus was using it.  And when I think Peter Thiel and Reid Hoffman invested, the average time on site per user was two hours a day. And so it's like, holy crap.
<bot>: And did they spend money on marketing?
<human>: No, no. And I think that's what's crazy is that oftentimes people don't communicate the truth about how these products actually started. Most people don't realize, they weren't there in the early days, they don't realize.  And you might hear some later stories about Facebook growth hacking and the Facebook growth team and all this other shit. That's not how Facebook started. People pulled the product. They were pissed when Facebook wasn't at their university.
<bot>: And again, I think this is a lesson on what the bar is for a consumer. This is why we're telling you these stories, is that the really iconic consumer companies, they tend to have in common  really excited users that use their product a lot. And the founders of these companies weren't like begging people to use them per se. They weren't paying a bunch of money in ads. They weren't, like all those kinds of tactics weren't what they did. They just actually made products that people became obsessed with very early on, frankly.
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<human>: All right, this is Dalton was Michael. And today we're going to talk about why founders shouldn't think like VC's. Shocking. I would have never imagined we had this opinion. So maybe we should start what is thinking like a VC? How does a VC, how are they trained to think?
<bot>: So, let's break this down. And I think, to start with, when we say VC, we don't literally just mean venture capitalist.
<human>: Sure.
<bot>: This should include management consultants.
<human>: Yes.
<bot>: Banker, investment banking, people that work in hedge funds, people that work in private equity. There's a whole host of jobs. And the people in these jobs, they train you to do a lot of market sizing, to build a bunch of PowerPoints.
<human>: Yes.
<bot>: Right. I mean, that's a job.
<human>: Yes.
<bot>: To analyze fundraising trends, to do market analysis, to read surveys about the market.
<human>: Yes.
<bot>: Again, lots of experts.
<human>: You guys talk to experts. Yes.
<bot>: You pay a lot of attention to the stock market market multiples, other things happening in the m and a market. It's an entire framework of thinking of small companies as if they were big companies and using these large company metrics and analysis to apply to them. And to be clear for this video, if you're in those industries, this is a great way to think. We in no way. Suggestions? Yeah, these are great tools. If your job is to be an investment banker, you should think like an investment banker.
<human>: Yeah.
<bot>: Right.
<human>: Public market investor should think like a public market.
<bot>: Right on.
<human>: Yes.
<bot>: However, what we have noticed is that this type of thinking, either because these founders have worked in these industries or have been exposed to these thoughts.
<human>: Yes.
<bot>: Bring this framework to getting their first startup idea and trying to get a first customer. Right.
<human>: Yes. And this is a problem, I think, that we see over and over again where it's almost like, to us, twisted. Like, you start having conversation with the founder and you'll actually feel like you're talking to an investor, to a VC, and you're like, but what about your passion? Like, what's your opinion? Like, what do you care about? And it's all kind of like contrived almost. You could have extracted it from Twitter.
<bot>: Yeah.
<human>: And it's confusing. It's like, I didn't hear any of your opinions, I don't think. And we've just been talking for 20 minutes.
<bot>: Now an example that I noticed a lot in a YC interview is they want to present a PowerPoint deck or a slide deck, and the way they describe the company is the way you would describe a very large company. But then when you're like, well, do you have any customers? No. And so they have 15 slides or they want to spend a lot of time talking about the market opportunities, but there's actually nothing whatsoever in terms of traction.
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<human>: This is Dalton Plus Michael, and today we're going to talk about commit or validate. When to trust your gut as a startup founder.  So I'll set this one up. I find myself encountering two situations at YC. Situation one is a founder who used to work at a company, built something extremely valuable at that company. It was deployed. The company loved that thing. And that founder thought to themselves, hmm, maybe other companies would want it. And so they left, started YC to try to productize the thing they built. Example two. Two kids, maybe worked a year out of college, and they wanna start a startup. They're trying to figure out what to work on. They're both technical, they're smart, they're bright, they wanna get rich. Don't know what to do yet. We see these two patterns constantly. And I find it interesting on how we give advice. I'm like, hey, which one of these people, which one of these examples should trust their gut?
<bot>: Yeah, basically we're saying that general advice  doesn't apply well to these two cases. We are admitting that you actually need bespoke advice, depending on which category you're in, that's a little bit different. And so, again, to make the extreme version of trusting your gut, this is when founders think they're Steve Jobs. They're like, well, Steve Jobs never talked to customers. Steve Jobs, and he would never give people what they asked for. No one asked for the iPhone. He had to like envision it. He didn't even use a phone.  Yeah, and so the extreme comic book version of trusting your gut is you talk to no one, you somehow from having great taste or a great internal idea of what people want, you just manifest it and it's totally unique and different.  And the opposite extreme is the comic book version of, you know, the mom test. I don't know anything. I have no ideas at all. I'm going to only talk to people and have them tell me the ideas and have no opinion. I'm going to assume that I know nothing and all my instincts are wrong.
<human>: In my mind, the perfect version of not trusting God is like the typical investor.  Like, I'm just going to hedge. I'm going to invest in a lot of different things and see what works. I can't even commit to one thing.
<bot>: Because yeah, sometimes we talk to founders that are like, yeah, we don't know what to work on. So our plan is to talk to people and they'll tell us what to work on. And we're like, great. How's that going? Right? So it's 0% trusting your gut.
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<human>: Welcome to Dalton Plus Michael. Today, we're going to talk about why business folks need great technical co-founders.  So who's this video for? Let's talk about the business folks we're talking to.
<bot>: Yeah, I think to set this up, Michael and I both talk to a lot of aspiring founders in any number of different venues, on the street, at conferences, in interviews, wherever.
<human>: They find us. They find us.
<bot>: And one of the more common opening lines  is something like, well, I'm a really good business person. I have the best ideas. Do I need a technical co-founder or how do I find a technical co-founder? Or I can't find any good technical co-founders. Like this is one of the number one opening questions we get when we meet people in the real world. And so this video is aimed at all of those people that ask all of these questions that we have met and all the people that haven't met us that might be thinking these questions.
<human>: And what we want to do is give you the key secret to actually being the best business co-founder. And we're not going to hide it. We're going to put it right up front. The best business founders recruit amazing technical co-founders.  And that is how they distinguish themselves. That is the number one distinction. So it's not what's on your resume, where you worked, the fact that you were some fancy executive, that you're tall, people like to go and have drinks with you, you've got amazing ideas. Unfortunately, there are a lot of folks like that.
<bot>: Yeah.
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<human>: I'm going to try out a really, really crazy kind of analogy on you. I think these best VC firms are like really high-end restaurants.  And I think that they like to give the impression that they go out to farms and they hand-select live chickens and live cows. They're farming themselves. So the chef is... Exactly. It's farming themselves. Exactly. Yeah. But when you actually look at most of the products on their menu, they come from purveyors who do that work for them, who identify the best ingredients, who prepare the ingredients,  deliver the ingredients in a nice box and a nice package. And I think that it makes sense if you're one of those firms and they had so much demand that you'd prefer things in a nice package pre-selected. So that's the service that YC provides VCs.  But it's tricky because these VCs also all say, we want to be your first check. So what's the difference between them saying that and why it's hard for them to actually be the first check in most companies?
<bot>: I think in practice, it's scary when your customers first talk to someone else before you because you can get disintermediated in the future. And one of the things that YC does  that investors don't love is we encourage you to talk to many investors instead of talking to just one investor. And so again, you could imagine that is not their favorite thing, that we encourage founders to speak to many investors in parallel instead of one. And so that is a bit frightening. And so when push comes to shove, they want to be the first people to talk to you, to get the first check, so it's a non-competitive conversation.  But look, they just are not in a position to do that many deals because of how the firms are set up.  They also have to worry about conflicts, where if they invest in the wrong company earlier, they're not going to be in a position to invest in one of their competitors in the future if they're taking board seats.
<human>: They invest in an Uber competitor super early, and then Uber comes. Makes it harder. They can't write a check.
<bot>: In addition, they're just, they don't have enough data. Like, they need data to invest in things at a higher valuation at a later stage. And so what they want, the perfect situation for VC is to see everything,  to meet with every company that they can, have the founder love them, and ƒthink that everyone else that is not them is bad, like it's a luxury good, like you're trying to create brand equity with the founders, fair enough, and then  When every six months, the founder should come back and pitch them again with a smile on their face. So they're never in a position that someone else funded them. And so what can often be tricky with YC companies is once a company does YC, they are less likely to do all those things. And they're much more likely to be desired by a number of other investors, which is again, competition is often bad for And so, you know, again, you can see the dynamic here. But at the end of the day, if one of these investors, we just, you know, Michael just listed them. If there's a really great company they have to invest. They're not going to say, no, we don't want to invest in this company if they did YC, because they're smart.
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<human>: Let's go through some examples of the midwit meme. And you have to start with the meme that you made for YC founders. So just to provide context, we're in the part of the batch where YC founders start getting nervous about fundraising. And whenever a founder gets nervous, they start overthinking. And whenever they start overthinking, they assault us with office hours on topics. And Dalton created this meme so that we could fight back. What does the meme say?
<bot>: Yeah, the meme is simple. The. The naive founder is like, oh, I'm gonna raise the amount of money I need to succeed. I need, I need. Here's the amount of money I need to raise for my series a. I ran a model, and it's, you know, $800,000, so that's what I'm gonna raise. That is the, like, naive approach. The really smart three. Three time founder, someone that's done this before, is like, I need to raise $800,000, so I'm going to do it. And then the midwit is the one who wants to ask 15 questions and try to construct the perfect round and be afraid that someone, they may not have enough allocation for value add investors, and they want to not have it. Signaling risk. They talk a lot about signaling risk, and there's, like, all these factors where I'll be talking to someone and we'll be like, 15 levels deep in a hypothetical for an offer that they don't have. Right? And that's. That's the midway, man. Is that, like, you're screwing yourself by overthinking all this stuff, instead of just being like, hey, I need x dollars. I'm going to raise it, and I'm going to get back to work.
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<human>: So anyways, what would be your last parting piece of advice for someone who suspects they're in this world?
<bot>: Look, technical people know your worth.  And if you're a really nice person, those are the people that tend to get ripped off the most. Follow our handy checklist and find a place where you're appreciated and valued the way you should be because you have this amazing rare skill.
<human>: And for those business people listening to this, don't exploit folks. Be honest, be upfront, right? Like make decisions that they're gonna  that your people you work with are going to be excited about today, but also tomorrow. Because like, if that amazing tech person leaves your company, you're fucked. All right, Dalton, great chat.
<bot>: Thanks.
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<human>: Yeah.
<bot>: What do you think?
<human>: I think it's tricky because all too often this group of folks are giving founders the advice of hiring executives before product market fit. It's like you need to build up the company. It's like marketing doesn't work. We need a marketing executive. Like the engineering team isn't productive enough, we need a vp of engineering. And more often than not, in this pre product market fit phase, the mistake is that there's the wrong person in the company, not there aren't enough people. The mistake is like, you've got an engineer that no one wants to work with or no one's measuring any of the marketing results. Right. It's like those are the mistakes. Not like you don't have a department for it or an executive to run it. Whereas we go right back to the first one. Right, when a company is scaling and growing post product market fit, like hiring more people is essential. So once again, we get this weird dichotomy.
<bot>: It's like zero to one, think about the first five employees of Facebook and the first five employees of Instagram when it was a startup before they got acquired, the first five employees of YouTube when it was a startup before it got acquired, versus the really awesome people post acquisition who had to step in and scale that thing. Those people are awesome. Hallelujah. They're super valuable. And if they weren't around in the zero to one stage, watch out. You get what I'm saying? It's a very different muscle to build scaling Instagram post acquisition if you were on that team than getting the first hundred users when you were the founder of Instagram. Right?
<human>: Very.
<bot>: And there's a whole lot more actually supply and demand. There's so many more people that helped scale Instagram than there are people that founded Instagram.
<human>: Yep.
<bot>: Right. There's just lots. So there's lots of folks that have lots of experience scaling products and you just don't meet as many that did the zero to one.
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<human>: What I love about this story is that while they were in the YC batch and they were asking people, do you need this? They were finding people who were getting screwed, right? It was like, oh, you're under 25. Yes. You can't get a credit. Sorry. No can do. Yeah. There's no like fill out extra forms. It's like.  completely getting screwed. Oh, you're not from America. That's a no. Sorry, you don't have a credit. You can't go. And so like, what I loved about it was that their product didn't even have to be amazing to start because the alternative was nothing. Yeah, when you're competing with literally nothing, oh.  And it's like, it's like the perfect example of the big company not caring. It's like, I don't care so much that you just can't use my product at all. And like, all they had to do was care more than that, right? More than no, like we'll figure out how to make it work for you.  And I think that it always just comes back to this, like those founders in the badge loved those guys.
<bot>: Yeah. Their customers were their friends. There were people they knew and they could relate to them. They could talk to them. They would go out to dinner with them and they genuinely knew the stories of their customers and cared.
</s>


<human>: What other trends are you seeing for the summer 22 batch?
<bot>: Yeah, I mean, let's see, to go through some of the stuff I've noticed. So for one, more applications. I think that's, I think that's always a trend, but there's definitely more applications and, you know, I think the new YCDL doesn't hurt on that one. And so yeah, more applications, more applications to read and the energy is feeling good, man. How about you?
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<human>: Now, let's be clear, all these businesses worked.
<bot>: Yeah.
<human>: So let's talk about it.
<bot>: Right?
<human>: Like, for Google, this was great advice. Right. For Google, hiring as many really smart people was essential because they were trying to do something really hard.
<bot>: Yeah. I think that the conventional wisdom pre Google was that search was a commodity and that Yahoo was good enough and that incremental engineering breakthroughs in search wouldn't matter. And Google disproved that where it was actually a hard technical problem, and they were able to put those engineers to work. Also, historically, this was right after the dot com bubble crashed, so they were able to hire some great talent that was available because the dot com bubble just crashed. And so if you really look at the decisions they made in context of history, made a ton of sense.
<human>: Made a perfect sense.
<bot>: But how many people did we know that blindly copied the Google Playbook? And they did not replicate Google's success, did they?
<human>: No, no. They weren't even trying to do anything near as hard. I think in Facebook's case, another perfect example of, like, not charging users was really smart. Right? They understood they could build an amazing ad business. They understood that scale was the only path to it. And, like, Facebook is an amazing ads business. Right? Like, that was really smart for them. Not clear that every business should be an ads business.
<bot>: Yeah. And when you think about it, how many facebooks are there and how many people that were blindly copying the Facebook cargo? You know, how many people that were cargo culting Facebook succeeded?
<human>: Yes.
<bot>: Not many. Again, maybe it's more than zero, but, wow, that was more of like a one shot epic company than something that people could just blindly copy and be just as successful as Facebook.
<human>: Right. The second Facebook style profile you had was delivering infinitely less value. Yeah. Than the first one you had. I would also argue that people, you know, Facebook and this whole going viral, it's a lot easy to try to make your product go viral if users spend 2 hours a day using it, right? Yes. Day one, Facebook people were spending 2 hours a day using it. If people use your product five minutes a month, it's a lot harder to go viral.
<bot>: You need some different tactics. You can't just copy Facebook blindly and hope it works.
<human>: So it's like, going viral was a great strategy for Facebook. Is it a great strategy for you? And then last with Uber. I think the hilarious thing about Uber is that most of the common beliefs about Uber just weren't true. People who were investing in Uber were looking at markets where Uber was doing very well in unit economics and purposely funding them to expand quickly. It wasn't people looking at Uber serving no markets well, burning money left and right and saying, oh, let's just throw more of our money on the fire. And it was weird to watch founders just be like, well, we should expand our business to 17 cities when it's not working in one. When, like, you remember the first time you took Uber? I do. It was a huge moment in my, like, it literally was so valuable. Like, it was immediately successful in San Francisco. And so this idea that, like, oh, Uber, just, like, nobody liked it, and, like, they just burned a bunch of money and somehow got successful, it's like, that doesn't make any sense.
<bot>: The idea that superficially copying Uber and copying the things that they said in interviews, pretending that you're Travis, whatever, doesn't work, it's just like, wearing a black turtleneck does not make you Steve Jobs.
<human>: Yeah.
<bot>: That does not make you apple. That is cargo culting.
<human>: Yes. Whereas, like, if you built a thing that people would use multiple times a week to get to the most important things in their life, like work or their loved ones.
<bot>: That's pretty good.
<human>: That's valuable.
<bot>: So hard to replicate this stuff, right? Man, it is.
</s>


<human>: All right, here's the next one. That was written in by a YC founder. They wrote, we copied another successful business model from an overseas market and wrongly assumed that product market fit was a given. If the product works in country x, it's gonna work in country y. We scaled up hiring quickly and burnt a lot of money before we realized that the users we were selling to did not want our product. This is something that happens so commonly. And what's tricky is that investors often, like funding these ideas. Cause they're so simple, right? This is a very simple thesis. If blank works here, it should work there. So oftentimes these companies, like, get money, but then fail after getting money. How have you seen this?
<bot>: I think, I think what we want to believe as founders, and this applied to me too, is that by getting validation from investors, or the press, or my friends, or employees, or winning a startup competition, whatever that meant, it was good. And that that was the validation, you know, hey, I've got, I've got validation. And it's pretty frightening to realize that you can get validation from all those things and it could still not work, you know, and that getting the stamp of approval, like ultimately you're responsible for if the thing works or not. And no one, it's like no one else's problem to make it work other than the founder you're kind of, you're kind of on your own on this one. And so it's almost like, it's like thinking that if you can pass the driver's license test to get a driver's license, it means you're a good driver. Like, I think all of us that have a driver's license know, you can still be a pretty bad. You know, there's a lot of variation in the quality of driving, and lots of people can get into trouble with their driving habits. Even though you have a driving license, there's no. And there's no mechanism, you know, unless you get pulled over. Like, things have to go bad or you get unlucky for an authority figure to get involved, but for the most part, you can get into all sorts of trouble even though you have a driver's license. That's how I view this, is that, you know, you could have your startup license. Hey, I have a website. I got, you know, I got an article. I raised some money. But, man, you can really do poorly, and no one's going to stop you.
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<human>: So let's go back to the dark ages. You and I went to school in the early and mid 2000s. And when we were in school, what's so funny is that like, it's probably hard for us to explain to a current college kid how uncool tech was. And then like, think of however uncool tech was, startups were 10X less cool than even that.  But, but maybe the way that I would explain it with a number, you know, I was a Yale 05 graduate and in my graduating year, Yale graduated 10 CS majors in a class of 1200 kids. So like, just to give you some perspective at that time, what was your experience like at Stanford during these times?
<bot>: were startups around, but this was just after the dot-com boom had crashed. This was in like an 02 and 03. And so you'd have to be a real idiot to intentionally get into the wreckage of the dot-com crash. Like it was pretty much people that just liked computers, would be my assessment. Had nothing to do with financial  Seeking financial gains. Cause again, if you do that, you do management consulting, you do, there was a bunch of other options. And so it was kind of nerds is how I would describe it.
</s>


<human>: I think the last example in light of Cruz, Cruz this week allowed any – started to allow the general public to drive in a driver-free, safety driver-free driverless car. I remember when Cruz was in YC and the V1 of the car, the V1 of the driverless car, Kyle and his tiny team built in three months. They retrofitted an Audi.  To call it driverless would be an overstatement. There were a couple of things I remember. One, there was a big red button on the floor in the driver's seat. And Kyle never explained what that button did. But it was clearly important and very easy for him to reach. Number two, it only works on the highway. Number three, it was basically adaptive cruise control. Like it was basically cruise control that stayed in your lane. It wasn't more fancy than that.  And then number four, the moment I remember on my first test ride on a cruise that I'll never forget is we're driving down 101 and Kyle says, oh, a shadow. Let's see how the car handles that. And I was like, oh, shit, Kyle. Out of everything I was looking out for, like curves, other drivers, signs, I didn't know that I should be afraid of the shadow.  And that was V1. That was V1. And Google had cars on the road retrofitted with all kinds of fancy equipment at that time. And Kyle had his Audi that couldn't deal with shadows. That's how it starts. So why don't you talk a little bit more viscerally, Dalton? We've given some examples, but give us more on what do you think the life and the job of a CEO in these stages, in these do things that don't scale pre-product market fit stages?
<bot>: Yeah, I think in the do things that don't scale philosophy,  the job of the CEO and the job of the co-founders is to do the shittiest, worst, low status work you can think of. It's the opposite of whatever your mental model, when someone says the word CEO and you're like, oh wow, CEO, visionary, you know, powerful. It's like, no, like you're like doing the shit work. And you've got to learn to love and embrace the shit work. That is your job at a pre-product market fit startup is,  to actually make everything happen and to be personally accountable for making the entire system run end to end. And we just see so many founders that think it's their job to be like at the late stage, you know, they're emulating what they think Elon Musk is like, or, you know, Mark Zuckerberg or something. But when you're a really small startup, it's the exact opposite in every way.
</s>


<human>: Let's talk about real health care. Let's talk about mental health care for a second. This is becoming less of a controversial issue, but I still think that it's something that needs to be normed more, right?
<bot>: Yeah, I mean, therapy is good.  medication is good if you're prescribed it and it's not from your friend. I'm just kidding. You know, this stuff is de-stigmatized and it's important. And like a lot of founders struggle, I think it's the ups and the downs exacerbate this stuff. And again, the stuff I said earlier, sleep disruption, stress, all these other things exacerbate it. So, you know, sometimes that is the appropriate thing to do here. So you should,  do it and not think you're too tough or whatever, whatever reason it would be that you wouldn't use these things as a, as a crutch. I just, I've noticed that people that aren't, the people that aren't willing to use this stuff, they find other crutches that again, I would not recommend.
</s>


<human>: All right. So the next one is Elon. You're familiar with this story.
<bot>: Yeah. So I actually heard the story from Elon verbatim. I met him before. And so I'll tell you what he told me about his life story. And again, perhaps he is an unreliable narrator about his own life. Certainly possible based on my interactions with him. But what he told me is the reason he started  what was it called, Zip2 and PayPal, was he wanted to make a lot of money. He said, what I wanted to do with my life is go to space. And I knew to go to space, I needed a lot of money. The actual line he told me, I swear this is a direct quote, is he said, my plan is to die on Mars, hopefully not on impact.  And I could tell he uses that line a lot. It's a laugh line. I think you said this in other interviews, but that's the line he told me. And he was like, look, when I came to the US, I came to Silicon Valley, it was a dot-com boom, and I just knew I needed money, and so I just was like, how can I get money fast? Again, this is very honest, the way he told this to me.  And that's why he did tech startups. And like all the ideas that he came up with were just about trying to build the most successful company using, I don't know, the conventional stuff. Like his ideas were pretty conventional. It wasn't hard tech. It wasn't deep tech. It was- It wasn't I need $100 million to start. It was, I mean, he did raise a lot of money for x.com, but basically it was pretty standard startup stuff. And then he leveraged his success at these companies and the network that he got  and the money that he made to start SpaceX, which is super cool, way to go, and then became an investor in Tesla. And many times, if you know the history of Tesla, he had to personally dip into his own checking account and bail the company out. And if he were not an extremely wealthy person, there's no way Tesla could have existed.  And so it's very hard for us to have this knowledge and for me to have this knowledge of talking to Elon and see people trying to emulate in-state Elon. But they're trying to live their life as per Elon's words when it's like, man, Elon didn't live his life to Elon's words.
<human>: But I'll say this, I think what's interesting is it's impressive to have this two-step plan and do it.  Right? I might even argue that what Elon did was more impressive. I agree. Right? Like start two businesses, sell two businesses, be rich enough to like start self-driving car company. And we like, hell, if you've got the balls to do that.
<bot>: That's a great plan. Yeah. But again, the key thing is to realize you have to do step one. Most mere mortals out in the world need to do step one and can't skip to step two, even though step two sounds cooler.
</s>


<human>: I'll go a step further. I think the whole argument is fake news. I don't think  This is a real argument, right? I don't think that anyone thinks it's more moral or good or right to start a VC-backed company or a non-VC-backed company. I don't think this is an actual debate. Yeah, I think that like starting a VC-backed company, really hard.  Not the best way to get rich. Not the best way. And relatively small number. The numbers are not huge. Not a good path. I always like to equate it to athletics. It's like getting into the NBA is really hard. Not the best path to have a good career.  is to be like, oh, I'll just, I don't know, I'll just make the NBA. Yeah, that's simple, right? Yeah, it's like, 450 guys, I'll just be one of those guys, and then game on, right? Right, they recruit from all around the world, I live in the world. Yeah, very straightforward, but I like that play. Yeah, no. So this is not the only way to get rich.  Let's take a further step. Most people who are rich did not raise venture capital dollars. That's right. Did not start companies.
<bot>: Real estate investing, stock market investing, being lawyers, being doctors. Again, go look up the numbers.
</s>


<human>: So one of the things that I've thought about a lot is what are the other things you can be passionate about?  in the context of startups that can motivate you to grind it out for years. Because that's the bar, right? What are you going to work on when everyone thinks it sucks for years?
<bot>: To dispute what we ourselves are saying, or to have a debate with ourselves, look, the problem with being like 19 or 20 is a lot of people aren't passionate about many things, and they all tend to have the same startup ideas. And so let me give you a great example.  find a way to plan to do activities in the real world with my friends. It's too hard to coordinate and plan activities with them. And so I'm really passionate about this, Michael. This is my... One of my biggest problems in life. This is my, we thought about it, solving this, finding a way to coordinate, going out with my friends is like the biggest problem we know about, we care about, we're experts. So, you know, we're going to do it.  What these people don't know is this is literally the most common college kid idea that's been tried for at least 20 years, right? Nope.
<human>: Well, they would know if they did any Google searching.  But they're experts, so they don't have to do any Google searching.
<bot>: Well, you know, Michael, no one just implemented it correctly. See, we have a better UI dynamic. So all the thousands of companies that tried this, they were all wrong, and we're right. It should have been by voice. That was the problem. So where I'm going with this is,  To the extent that the stuff that you care about the most is the same as everyone else, or you don't actually have unique passions, you might want to zoom out a little bit and not have passion be your primary mode of making a decision.
</s>


<human>: All right, next communications. I don't know about you, but we started with one phone line in the house. Yep. And that's it.  That was communication.
<bot>: And people are like, whoa, but it must have been so great. There were no phones, and it was so much easier to be a teenager and all that. I mean, maybe.
<human>: Maybe. No, it wasn't great. You couldn't be on the internet and on the phone at the same time.  I don't know if anyone's ever taken that for granted. So now when people like, you know, I open up the messaging app folder on my phone and there's like 17 apps with video, audio, text, I can text people all over the world for free. I can call people anywhere in the world for free.
<bot>: It's better, it's like a lot better.
<human>: It used to cost money, we were living in New Jersey, it used to cost money to call New York. It's like right next door. You got to talk fast. That was long distance.
<bot>: So yeah, so communications, a little better.
</s>


<human>: So there's another concept in this default alive, default dead article that was linked to. It was another PG essay called the Fatal Pinch. I think it's so interesting because we see this in office hours so frequently. Like, it is so common that we will talk to a founder who's in the fatal pinch and doesn't realize it. And it's funny because at the end of the batch, you tell everything, everybody. A very simple concept. It's basically stay lean until you have something and then spend money on growing it. Yet founders inevitably get frustrated, get tired, get distracted, and somehow always come to the conclusion that spending more money allows product market fit to happen faster. And what's sad is that, like, probably, at least for me, more than 50% of the time, I don't get the office hour before the founders decide to ratchet up the spend.
<bot>: Right? It's always when it's too late. They're like, yes. I always get the office hour when they're down to low Runway, and they're like, we're dead. We're bleeding out. You know? Please help.
<human>: And it's like, if you had talked to me six months earlier, we could have tied a tourniquet around your gaping leg wound, and you'd be alive. Hell, we could have saved the leg. What's tricky is that if you find yourself even suspecting, you could be in this situation. Like, you need to do this math as soon as humanly possible, right? Like, you're probably too late to do this math in all cases, and no.
<bot>: One wants to do it because it's too late, because it's a buzz kill, man. No one. Like, who wants to be that guy? Everyone's gonna be mad at you. Your investors are gonna be like, oh, why are you bringing this stuff up. You need to focus on growth. Like I didn't, you know, like, people will give you a hard time to bring this stuff up until it's too late. And then everyone's like, why didn't you bring this up earlier?
<human>: To play devil's advocate, though. Well, we have a bunch of great engineers, Dalton. We can always get Accu hired, right?
<bot>: Yeah. So we have the data here at YC, and I will not tell you that no acquisitions ever happen. But similar what I was saying earlier, where if you only read TechCrunch about the successful fundraisers, it gives you a warped perspective on how common they are successful, and that most series a fundraiser fail. Well, guess what? No one gets acquired effectively. Like, there's an asterisk next to no one.
<human>: But.
<bot>: The companies that attempt, when they're low on Runway, they flew the plane into the side of the mountain. There's no acquisition coming, man. I'm sorry. Maybe you could get lucky. Maybe you built a great team. Everyone says that. But again, to keep picking on the fast thing, I think a firm paid them $0, I believe, to get all of their engineering talent. What would the incentive have been for a firm to pay any money for a company that's rapidly dying? There's no market for a company that's out of money, right? Anyone that's smart on the buy side knows that a company that is hemorrhaging cash will soon be bankrupt. Why would you want to buy that problem? You're almost worth less than nothing because you often have legal liability, and so no one wants to buy problems.
</s>


<human>: Now, what about the early employee?
<bot>: Well, the early employee notoriously kind of gets hosed on this stuff, especially if they're providing the work of an equal technical co-founder, yet they get 1% or less of the company. Again, this is very common where you'll have two business founders, three business founders, you know, and then they'll have someone that's, you know, lead engineer that is effectively technical co-founder, and they get like 1%.  Not great.
</s>


<human>: So let's talk about equity.  What are the questions people should ask themselves about whether they have enough equity, equity at all? This comes up a lot.
<bot>: I know you are a big proponent of this, Michael, but in general, something like equal equity is pretty common for startups that apply to YC and is something we recommend. And sort of the anti-pattern we might see is say there's two founders and the non-technical business founder has 90% and the technical person has 10% or less,  And the explanation is basically just that the business founder...  had sharper elbows and was a better negotiator. There's actually no justification for this.
<human>: It was my idea.
<bot>: Yeah, okay. Right? And so there's really no good reason. It's just that the business guy gets more for whatever case. And usually in those situations, you wind up with something much closer to even. Again, you give this advice. How do you explain this when this happens?
<human>: I always just think that the vast majority of the journey is ahead of you, not behind you. And you want your co-founders to feel like owners and partners.  And I always think about, in the early days of our company, on Sunday night when the website went down, I couldn't fix it. And so we're going to live in one of two worlds, the world where I get text and I have to like cajole people to fix it, or the world where everyone feels like an owner.  and they get text and they wake up and they fix it, right? And I think a lot of people just don't understand that if you can make people inherently motivated, they'll do far better work than if you fucking yell at them. So that's the founder. Do you have close to equal equity?
<bot>: Yeah, what does your equity look like? And does it make sense? Is the justification for whatever your equity is, does it make sense to you based on what you bring to the table and based on your actual responsibilities?
</s>


<human>: And I think that, like, the other thing that's really tricky, and we were talking about this earlier, is that unfortunately, founders get caught up with this math around default, dead, default, alive, because the math they use to pitch their company to investors is only a subset of the math they need to run their business. And I think this point is really tricky. Like, when you're going in and pitching for a series a or a series b, so often, especially in a good economy, you're talking about top line revenue, you're talking about new accounts that you've opened, you're talking about your month over month growth, and oftentimes you're talking about your headcount, your hiring plan, slash the execs you've brought on, so on and so forth. Like, that's the math that you're putting front and center. That's the math that investors, especially in good times over, focus on. Whereas I'd argue when you're running your company, those numbers are important. But there's also your burn rate, your retention, how much your existing customer accounts are expanding, your revenue expansion over time. Those metrics are the ones that can better help you when you're trying to figure out how to make sure my company stays alive. And I think this is where things are tricky, is that in many ways, investors are setting the agenda on what metrics are important for a company, and the investors are a little biased. They have a point of view that might be not oriented around keeping the company alive. And PG talked about this. What was PG's line on this stuff?
<bot>: Yeah, he calls this in a blog post, killer Cure, where he just points out that a founder and investor have completely opposite incentives, where as an investor with a portfolio of companies, if you push them all to grow fast, and some of them successfully grow really fast with a high burn and thread the needle and become uber or whatever, and some of them completely explode, like fly the plane into the side of the mountain, like, fast. And there's lots more fasts out there. It actually makes sense from a portfolio theory to advise people to do this, because either way, either it works great or it dies and goes away and you get to spend your time on something else. But, like, either way, it's explosive, right? It's explosive good, explosive bad.
<human>: Well, and for a good fund, that time is the limiting factor, right? Not money.
<bot>: Yeah. And board seats. You're limited as a VC on how many boards you can sit on and so you don't want to sit. So. So basically, if you're a VC and you sit on a board of a company that takes forever to get big with, like, low burn, that's kind of boring and kind of bad for your career, and look, you look bad to your colleagues. Like, there's all these dynamics that founders are not aware of. That's not a good move to be on the several boards of companies doing just okay. Versus if you're a founder and you're choosing between, do you want a zero, literally zero, or do you want to keep going and give yourself more time to figure out product market fit and maybe you can figure out an exit and make life changing money.
<human>: Yep.
<bot>: Then that to a VC, doesn't matter at all. Like, man, that sure sounds like misline incentives, right, Michael?
<human>: Like, massively so. Sometimes the investor in this equation is kind of is perceived by founders who haven't raised money yet as, like, demanding that the company grows or demanding that the company burns a lot of money as if they were the boss. And I think this is a very bad misconception. Like, I don't. I think that's extremely rare for an investor to be demanding you to, like, burn like crazy. I think that the horrible truth is that founders don't need much of a push.
<bot>: Oh, it's like, it's like how, Michael, I hear you're demanding people to raise at high valuations.
<human>: That's the rumor I heard, yes, exactly.
<bot>: Aren't you demanding YC founders? I am.
<human>: I'm twisting their arms to dilute less. It's, I'm so powerful. I think this is the tricky bit is that, like, deep down inside, every founder wants permission to blitzscale.
<bot>: And if they're special and they're going to build the next big one. And so if you talk to, you know, half a dozen people, and one of them's like, yeah, I don't know, maybe you should grow faster. I don't know. Maybe burn's not our biggest concern. Like, that's actually the fly on the wall recording. I wish you could have a fly on the wall. It's like, yeah, you know, these numbers, I think you want to get these up. But I don't know if Burn's my biggest concern. And then the founder hears that and they're like, we're going.
<human>: It's time. I knew it.
<bot>: What did fast do? They raised 100 million and they burned it in ten months. They got into a 10 million a month burn. That's incredible. I'm actually super impressed you have to really try.
<human>: You'd have to be working pretty hard on it. We certainly need a lot of recruiters. You gotta hire a lot of people.
<bot>: Yeah. Cause, like, what else are they spending money on?
<human>: There's no inventory. Like, if it was a hardware company, I'd understand, but there's no inventory. Like. And it's. I assume they weren't getting offices. It was during COVID Right. So it's like, jeez.
<bot>: I have no idea. I just. It's. That takes effort is my point. You don't just wake up one day with a 10 million a month burn and be like, oh, you know, we're cutting free snacks. You know, this spinning is out of control in these stacks. We need to be able. We need to tighten our belts, friends.
</s>


<human>: Dude, do you remember just having to buy maps? Physical maps to drive around a city? And your dad would have a bunch of maps in the car for all the places you might want to drive to in the future. So Translation's gotten a little better. Yeah. A little better.
<bot>: What else has got better health care? I mean people are living longer. They're living better lives. Yes standard of care infant mortality Yes, life expectancy around the world. Yes people making more money being raised out of the poverty line I mean just look at all the stats you can look it up. Yes, actually  Like, zoom all the way out and look at this stuff for yourself.
<human>: Yes. It's pretty cool. The number of people living in extreme poverty is less. The number of kids living longer. Once again, we're not talking about the difference between, like, the Civil War era and today.
<bot>: This was, like, 20, 30 years ago.
</s>


<human>: Oh, yeah.
<bot>: I would argue is not venture capital backable. You know, a lot of the stuff that I see on the television show, you would never in a million years be able to raise VC from it. And so I think you watch Shark Tank, and you think that that is reality.
<human>: No, it's not this industry. So I think that, um,  That's the first thing, is that if you're starting a business that can appear on Shark Tank for the most part, you probably shouldn't raise venture capital. But I think there's actually a deeper thing here, which is that let's say you want to start a startup business. You don't have to raise venture capital either. Correct. And I'll say the same thing.  I don't believe venture capitalists want to invest in all software businesses. And I don't believe all software founders should raise venture capital. Yep.
<bot>: Yeah, let's talk about them. I think what's really going on is, I think if you looked at how many businesses are started every year, what percentage of those are venture funded?  But I would guess definitely single digits, if not less than 1%. And so if you just look at businesses that are starting in the world, it is like a weird outlier freak occurrence that is a VC funded business. But I think if you're just consuming content, you're watching media, you're watching YouTube, you don't realize that.  Venture capital as a product is specifically for investing in something where their investment could be worth at least a hundred times more, if not a thousand times more. And so trying to put that jet fuel into something that isn't going to grow to be big, everyone is going to be sad and lose. And so you shouldn't do it.
<human>: No one wins. And so again, I don't think that there's this
<bot>: push that I can see from investors to try to convince people to raise VC money for something that has no chance of growing like that. It just doesn't make sense for anybody.
</s>


<human>: Hey, this is Michael Seibel with Dalton Caldwell. Welcome to Rookie Mistakes.  We asked YC founders for their rookie mistakes so we could share them with you and help you avoid them. Here's the first mistake that was written in. In the beginning, when you're still figuring out your idea or product, get in as many user or potential user calls as possible, at least one per day and ideally multiple. It seems obvious, but it's something that we personally failed at in the beginning.  Don't brainstorm ideas in a silo. You don't know what people want.
<bot>: We have all these ideas in our heads as founders about what people want that the moment they are subjected to reality are embarrassingly wrong.  Like there's nothing more humbling. There's nothing that makes you feel shittier than seeing real people using this thing that you built that you spent a bunch of time on and just like ripping it to shreds and not understanding it or like using none of the features or clicking on the wrong thing. It's horrible.  So talking to users is like the inoculation against this spending inordinate amounts of time doing something that is completely irrelevant to your end users, okay?
<human>: So you're suggesting then that I take surveys, right? I mean, what's the most efficient way to learn what my customers want? I should survey them, right?
<bot>: So this may be offensive to some folks listening to this video, but I don't,  think that user surveys are that valuable when choosing a startup idea. Surveys are a useful way to get certain kinds of feedback. I would think of it as sort of micro-optimizations or trying to choose directions. Or say you have four names for a company, you want to choose which name was the best of the four choices. Yeah, great, run a survey. But when you're looking for fundamental truths or you're trying to find your first customer or market validation, you want to be  harsher or harder. Well, what does that mean?
</s>


<human>: So, let's actually go through the kind of the histories here. So, you know, if we start with Sam, Sam's first startup wasn't OpenAI. Nope. It was a company named Loot. He did it when he left Stanford. Yeah, he was a college dropout. He went to Stanford. And then he went to YC.  And then he was able to raise money for Loopt, and Loopt was like a mobile social product to see where your friends were in the city, released before the iPhone. And raised a relatively small amount of money, had a relatively small team, iterated, and  honestly like used the YC network and then the network he built on top of the YC network to build a successful career. Yeah. Interestingly enough, like that worked really well for him.
<bot>: Yeah. And people don't think about looped. We don't talk about looped. I don't even know, probably people seeing this video, you know, Google it. This is a real thing. There's a lot, there's lots out there, but this was a really important part of how someone like this was created or how they, how they,  got enough of a network to make change in the world, was doing what was a pretty garden variety path, similar to you and I's path and many of our colleagues' path, of just doing a pretty normal startup at a pretty normal age with a pretty normal outcome, like pretty standard.
<human>: Yeah, and it's weird, right? Like go to a good school, do YC, start a startup. That is what led to eventually OpenAI.
<bot>: You know? Right. And so we're just flagging this so people remember. That's what happened. Is that the beginning states before OpenAI was fairly standard stuff. And so if you actually wanted to emulate Sam, you would not immediately go try to start a lab and raise $100 million or whatever. Yeah. Because that's not at all what he did.
<human>: And by the way, nor could you.  I think that's a really important point. For literally 99.9999% of founders, you couldn't copy Sam's play starting at OpenAI. Sam couldn't copy Sam's play starting at OpenAI. And by the way, I think this is an important point to make. I sometimes do meet people who can do things  Better or have inherited advantages and the advice they give them is very different. Yeah, you know and so, you know If you can do this, maybe you're a considerate. Yeah, but if you can't why are we debating whether it's the right move or not?
<bot>: Yeah, a lot of the people that were most influenced by his advice of like maybe I should be raising a hundred million Are people that are not gonna raise a hundred? No, so why so it's kind of like a disservice to these people. Yeah, right  And so if you're one of the people out there that can raise $100 million.
<human>: Or they won't do a startup, because they're like, if I can raise $100 million, it's not worth it.
<bot>: Why even bother? Yeah.
</s>


<human>: So the next one on the list is it's okay to take a day off. It's okay to go home. I think that you know There was one moment in my career where We were gonna get bought social cam was gonna get bought and we were two months into the diligence process and  We got a call that said the deal was off. And it was the only moment in my career where I was like, I'm not going to react to this well in front of my co-founders. I just need to go home. At least home I can react.  in a way that won't be a bad example to them, you know, like, because they're going to look in my reaction, they're going to be like, are we fucked? And if I'm looking like we're fucked, like, that's not helping. You know, when the generals like pulling their hair, being like, this looks horrible, we're going to die. It's not good. And man, like going home,  Hanging out with, you know, at the time was my girlfriend, but then, you know, later became my wife, like, taking that day, the next day, I could kind of bring a better Michael to the table. Yeah, right. You know, that was, that was a big thing. That was a big thing.  I was thinking about this in the context of like, when things go bad, there's a current set of people you should probably be hanging out with, and a certain set of people you probably shouldn't be hanging out with, right? Like, how do you think about that?
<bot>: Yeah, I mean, I have my personal experience, and I have all the data points we have across YC Founders, and you just sometimes see people...  that are taking punches and having a hard time. And there's some really amazing people that you can hang out with that support you and tell you you're okay and validate your experience and like.  let you take space for yourself and like all this good stuff. And like these are these are great people to have in your life. And then we see other sorts of folks that are like, you know, oh, you should do tons of drugs or, hey, like, let's go not sleep for a really long amount of time or let's hang out with celebrities or like, you know, like there's all these different crowds you can get into. And. It's  Depressing how predictive that is for how people will deal with like setbacks, you know, even and these are adults We're not even talking about these are these are adults. These are our own people our age people Still struggle with this particular one And so I think you just want to think about Yeah, who you're spending time with when you're  when you're taking punches and what kind of habits that you're taking from the peer group?
</s>


<human>: What was the DoorDash story, Dalton?
<bot>: Well, look, when you think about something like food delivery, you imagine a scaling, you want to be doing hundreds of orders a day. And so the way the founders got started,  was they just did all the deliveries themselves. They didn't have to hire anyone or build a driver app or recruit drivers. If someone made an order via DoorDash, if some miracle happened and someone made an order, the founders would drop everything and go deliver the food.
<human>: That was actually how they got started. Go ahead. What's so cool about that is that one of the other topics in this essay is delight your users.  Well, the easiest way to delight your user when you're doing food delivery is you do the delivery yourself, right? You race to the freaking restaurant, you make sure you get the right thing, you throw in an extra, you deliver it yourself, you say thank you. They didn't have to deal with managing a driver, network, motivating, it's like they just did it themselves.
<bot>: And think about all the other ancillary benefits where they got to see why it was hard to do the deliveries. They got to talk to the restaurant owners personally and develop a relationship with them. They got to talk to their users. They'd be like, hey, here's your burrito.  I'm the founder of this company. Do you like it? Would you order again? Isn't that funny? Like, could you imagine a more lower status thing than, of course not, but that's why it was awesome. It was not scalable. It is, in present day, if you order from DoorDash, Tony is not gonna deliver your burrito, or he might statistically. He still does this sometimes. I'm sure everyone saw the news. He still does this. To this day, the founders still do deliveries. But like, that was not a scalable strategy, but man, that's how they got off the ground.
</s>


<human>: I remember, you know, when Gusto went through YC because they were actually in my second batch in winter. Twelve. And another example of, if you look at Gusto today, you would say, oh, you can do payroll, you could do benefits, you can see your chart, you can do 401k. It's like this tool chest full of amazing HR tools. When Gusto started, it was a company named Zen Payroll. It did exactly one thing, your payroll. Back then, if you didn't use Zen payroll, you'd have to call up ADP, and ADP would bring someone to your office for you to sign stuff so that you could run payroll and then every month you had to call someone on the phone and say, yes, I do want to run payroll this month. Like, that was state of the art. And then Gusto said, we can just do that online. And that's all it's going to do. And you're going to love it, and you're going to sign up and you're going to forget about it, because that's what good payroll is, right? You forget about it. And so to work like.
<bot>: Yeah imagine a Version of Gusto or Zen payroll that had a lot of features but constantly didn't pay your employees. Like, like a broken version. A product that doesn't work with lots of features is infinitely worse than a product with one feature that works. And again, like.
<human>: Let's play that out. Let's play that out, right? Imagine if it's like they were like, you get healthcare and you get benefits and you get 401K and payroll, and none of those features work.
<bot>: And sometimes we lose the money.
<human>: Yes. Like, you would hate them. You would hate them.
<bot>: That sounds like Verizon or something, you know?
<human>: Exactly.
<bot>: That's a great way to a hated company is to have a lot of features that don't reliably work.
</s>


<human>: Then maybe the last one, even more modern. Uber. Yeah, this was the fun one. I think it started with spend as much money as possible, which I love because Uber was a successful company.
<bot>: It's great.
<human>: And the idea that we could boil down a key strategy to spend as much money as possible, but that was the takeaway.
<bot>: They wrote a book about it. It was called blitzscaling.
<human>: Spend all the money as fast as it comes in. What's funny about maybe these Uber ones that are slightly different from the Facebook and Google ones is like, I don't think Uber even did these things.
<bot>: Yeah.
<human>: Like cargo culting kind of took on its mind of its own.
<bot>: Exactly. And again, to be really clear on the point, Uber did a great job of what they did.
<human>: They broke and roll.
<bot>: It's the folks that were like, well, Uber did x, so we should do this.
<human>: Yes.
<bot>: Without really understanding why Uber did the things they did. They would superficially scale the way they scaled, burn the way they burned, ignore laws the way they ignore laws, ignore.
<human>: Unit economics, go to as many cities as possible as possible.
<bot>: It was the superficial wannabe Ubers that did the silliest stuff versus Uber itself, where that worked pretty well. Right.
</s>


<human>: And you know, at my school too, I think there was a whole set of kids. Um, and I think this makes sense who are like, you know, I'm going to do really good in high school and get into a really good school. Okay. I'm at that school. What's the next.  status seeking thing that a gunner should want to go after. Right. And, and to your point, finance, consulting, law, medicine, those were the like easy ones. And they had a lot of the characteristics of school. Like there was a clear application process. There was a clear steps. These steps were kind of imposed upon you. Like it was, it was a very comforting structure.
<bot>: Yeah, there was a lot of recruiters, there was stuff on campus. And also you could brag to people that you, what offers you got, right? Like a lot of these places, you would interview at all the management consulting places and then talk to, you'd brag to people about all the, you know, who you got offers from.
</s>


<human>: It's always much more enjoyable work with strong technical teams. But, you know, over the last, you know, let's say three, four months, what are you seeing overall in our world?
<bot>: I think that people that want to do a startup because they're excited about building something and solving stuff for users, those people are still applying. If anything, those folks that aren't making fear-based decisions are more excited to apply to YC and do this, almost because it's more rebellious or anti-something to do a startup when it's less cool to do it. And this makes sense, again, if you actually look at the YC data,  Some of the best companies we've ever funded happened when either there was a full downturn or at least a blip, I think we can call it a blip, like some of what happened in 2018. But look at when Stripe was founded, look at when Airbnb was founded, look at when Dropbox was founded, right?
<human>: Yeah, it's a weird trend because I agree with you, it's both a little bit like, I want to go against the flow, there's that set of founders, but there's also the set of founders who are just strategic.  who are just like, hey, look, in the middle of the hype cycle, hiring is harder, getting access to customers is harder, like 17 of your competitors are gonna all get funded. It's weird because on the surface, the hype cycle looks good, but when you actually get into the dirt, the hype cycle hurts just as much as it helps. And so I'm starting talking to founders in this batch who are like, yeah, no, this is actually like,  They're not wishing for a downturn, but they're like, this is the time when it's strategic to get in the game.
<bot>: Yeah. Make hay while the sun shines, right? This is where, oh, cool. The price of Facebook ads is dropping. Oh, cool. All these factors are changing. And so if you're well-positioned, this is when you go on offense.  You're not like defensively, oh, I'm going to hide. There's a lot of folks that we talk to that are like extremely ready to go on offense. Yes.
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