In this week’s lecture YC President Geoff Ralston shares parting advice for all the founders that participated in Startup School.
If you want to sign up for next year’s edition of Startup School, you can put your name on the waitlist at StartupSchool.org.
00:00 – Intro
00:31 – Geoff Ralston’s Parting Advice
00:51 – There is no one path
3:19 – Find your path
3:26 – Focus on what matters
4:14 – Startups are hard
4:46 – Things will go wrong
8:04 – Determination
10:21 – Default to action
11:31 – Don’t just not be evil. Be good.
13:56 – Summary
Geoff Ralston [00:00] – Hey, how’s it going? This is Craig Cannon and you’re listening to Y Combinator’s podcast. Today’s episode is a recap of the 11th week of Startup School. In this week’s lecture, YC President, Geoff Ralston, shares parting advice for all the founders that participated in Startup School. This is actually the last week of Startup School recaps, so the normal podcast returns next week. If you want to sign up for next year’s edition of Startup School, you can put your name on the waitlist at startupschool.org. All right, here we go. Here are a few things to think about as you enter this next phase of your company. It’s so easy to be distracted by what’s happening with other startups. It’s a great thing to be part of a community of startups. This is the one thing you have to be careful about and to remember is that every startup, every single one has a different path, every founder has a different path. When I first came to Silicon Valley to work for the venerable company, Hewlett-Packard, as a coder, I dreamed of starting a startup. We used to go drinking Friday nights and talk about… Well, drinking was the important part and talking about startups was the second most important part, but that’s what we did. We always talked about what our path would be, what our founder path would be. We had no idea how to go about it. PG hadn’t started Y Combinator yet. We couldn’t go online to ask basic questions about how to start a startup. Actually, there wasn’t even an online back then. Venture capitalists were these mysterious suits who only would talk to MBAs.
Geoff Ralston [01:53] – We didn’t know where to go. It actually took me 12 years to find my path, to start my startup. That was my path and it worked out. Everything’s different now. Thanks largely to Paul, there’s so much help. I hope that YC Startup School has been transformational for you guys, for your companies, and for your future. I hope you’ve learned enough, focused enough, launched enough to make a difference, to make a difference that will put your startup on a path to success. That path will be different for everyone. When I finally gave up my job, gave up working for the man and began to search for my future startup, I came to build web-based email later that was purchased by Yahoo and that’s where I met PG and his co-founder, Trevor, at their company Viaweb. Before starting YC, Paul spent tons of time doing other things. He wrote, he painted, before he found his next path. Trevor moved out to California, funded his own hardware startup to build robots. Whatever your path, find it, make it yours. And you do this by focusing on the important things. Focus on what matters. Focus on what you’ve learned at Startup School. Stay connected with the community, use the updates, use the forum, talk to people, most importantly, as you’ve heard again and again, make something that people want. As you do that, as you make something people want, measure it, keep track of your progress. Make sure you know where your value is added, hire incredible people, surround yourself with the best of the best and that will give you the best chance to build an epic company. Don’t give up,
Geoff Ralston [04:03] – focus on making a company that is healthy and happy and moving forward always. We say this all the time at Y Combinator, startups are hard. The books written about startups talk about how hard they are, where there’s no easy decisions. It’s hard, and it’s all consuming, and it’s the most wonderful thing in the world. PG wrote an essay where he quoted a founder saying, “It’s surprising how much you become consumed by your startup. You think about it day and night, but it never does feel like work.” However, one of the constants of startups is that things will go wrong, things will go wrong with your startup. They always do. It’s almost the beauty of startups. You guys are the problem solvers in chief. The times that I remember the most when I was at Startups are where things went wrong, and we found solutions. Even when I was by myself, when I quit HP to start a startup, I was lost. I didn’t know what to do until I realized I needed to make something and I started coding, and I started talking to customers. In that startup that Yahoo bought 411, some of the problems we ran into were earth-shattering, and it looked like it was the end of the company. Some we just thought were like that. We thought if our site ever went down, that would be the end of the company. We had to be the most reliable service on the internet. We had all of our own servers in our office. Everything was right there and that was great until the power went out. Now, we had thought of that eventuality, and we had universal power supplies,
Geoff Ralston [05:53] – huge batteries, really big ones that last for hours. But this power outage in particular that I’m thinking of went on and on. It lasted and lasted and lasted. After six hours, we were shutting things down to preserve electricity. We kept the core service up. But then the UPSes started to beep saying we had a very short time left. Almost simultaneously, the lights went on but not in our office, across the parking lot. The line where they had brought power back was directly next door, but our power actually wouldn’t come on for another six hours. We solved the problem. We got a really long extension cord, I happen to have a little plug you could screw into a light bulb, we plugged the cord in and stayed up and never went down. I don’t know if that was an existential problem, but we solved it. Another thing I remember is when I was running a company called Lala, which was a music company. This company built a great product, people loved it. It was so good that Facebook actually chose us to be Facebook music. This was a huge deal. This was company making, or as it turned out, nearly company breaking because we worked on that deal for six months. Six months, the most complex deal I’ve ever been involved with. We negotiated with Facebook, we negotiated with every single music label, with every single music publisher, we crafted this deal. We were almost at the finish line, maybe a week or two or three away and Zuck canceled the whole deal. Our company had focused exclusively on this for so long we were lost. But we didn’t give up after that. We might have, but we refocused.
Geoff Ralston [07:48] – We built new services. We did a deal with Google, we did another deal with Facebook. Six months later we were purchased by Apple for almost $100 million, which in the music industry is pretty good. We have so many stories like this at YC of founders overcoming adversity with determination, grit, resourcefulness. The canonical story at YC is of course, the Airbnb founders who actually made cereal and sold it to survive. They have other stories where there was a disaster in one of their rentals and how they responded to that, turned the company actually from a real negative into a positive. There’s so many of these stories that I can think of. There’s a company that was a high flyer, was doing incredible, was selling so much of their goods, mostly from China, that they were one of our most valuable companies. Then all of a sudden, China shut the door, closed off the trade, killed their business and the founder had to personally lay off hundreds of people. He sat in on every single layoff. He went through trauma that’s hard to describe but he survived and came through the other side and that company is once again thriving. There’s another company I like to think about this great founder team. We really liked the founder, he had a close friend as a team member but right before they started YC, something went wrong between them. The co-founder quit, an old friend, and actually sued the company. We had to push back and say, “Look, you’re not ready for YC now.” He had to deal with a really traumatic situation with a lawsuit from a friend, didn’t have a lot of cash,
Geoff Ralston [09:48] – had to pay out to make it go away. But surprisingly really, showing the kind of grit that really makes for great founders, he came back, he did a subsequent batch and that company now has millions of dollars in the bank, millions of dollars in revenue and is doing fantastic. These are the stories that you’ll remember, these are the tests that test whether you have the ability to create an epic company in the future. What do you do when you’re in this situation? Well, my simple answer is always default to action. Write code, talk to users, that’s what we did at Lala, we went back at our core product and made it better. You see this all the time, things go disastrously wrong at a startup and the founders get sad. Sadness leads to inaction, it leads to apathy, it leads to depression. Don’t do that. Don’t get sad. Go, do, write code, talk to users, make your product better. Always make forward progress. Sam Altman, the president before me, always used to say be ambitious. This is the time to think big. When things are the worst, make progress, take chances, if you can, stay default alive, because that way you can survive through everything. Keep profitability within reach whenever possible and keep going. All of these are a simple way of saying, to whatever extent you can, keep control of your own destiny. Lastly, I want to encourage you to think about the kind of company you’re building and why you’re building it. Aspire to create an epic organization that will outlast you. Interpret this quote from PG, “Don’t just be evil, be good,” broadly.
Geoff Ralston [11:47] – Benevolence will pay you back. This is not neutral. This isn’t just idealism. This will actually make your company better, more likely succeed, more powerful. PG wrote an essay about this and you should read it where he talks about the help you get when you’re benevolent. How you improve company’s morale, how you actually can create a power equation that makes your company more successful. And being good, as I said, you should think about broadly be good and kind to yourself. Eat well, exercise, stay in control of yourself and your sanity because rolling back to what I said earlier, startups are hard, really hard. Be good to your co-founders. One of the main reasons that companies fail is because co-founder relationships breakdown and founding teams break up. We funded a company in the summer of 2015 called InnerSpace, which has a lot of material on how to communicate well with your co-founders so this doesn’t happen. But likewise, be good to your employees, be good to the people you work with, choose a culture and values that are positive, make your company a happy, exciting place to work. You can always feel that vibe if you go into a successful company. Go into a company with a hundred people where they are moving, and they are going forward, and they are creating something special and you can feel it. Of course, be good to your customers, they pay the bills. They’re the reason you do what you do. Being customer-centric is always a recipe for success. Be good to your investors, they took a chance on you and that will pay back in the future
Geoff Ralston [13:33] – because you never know when you’re going to raise money again. Lastly, this matters so much to us at Y Combinator that’s why we’re here. We intrinsically believe that by working with great founders like you all, we make the world a better place because you guys make our world a better place. Be good for the world. In summary, find your path, find your own unique path to startup success. You do this by focusing on what matters and by building something people want. Remember, things will go wrong, they do go wrong, but be determined, resourceful in the face of adversity and you will outlast those problems. The best course of action is action. Default to it, default to action, inaction in a startup is the death of the startup. Don’t be sad, be determined. Lastly, be good, be kind, and create the kind of company that you would like to work at. I hope your startup experience is like mine, the highlight of your professional careers. Good luck. Thanks so much for taking part in YC Summer 2019 Startup School and I hope to see you all again soon.
Craig Cannon [14:54] – All right, thanks for listening. As always, you can find the transcript and video at blog.ycombinator.com. If you have a second, it would be awesome to give us a rating and review wherever you find your podcasts. See you next time.