

Lessons of Y Combinator: Things I’d do differently after 2 startups - marcus
http://foundread.com/2008/04/02/ycombinator/

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misterbwong
3\. We focused entirely on product/market fit.

I'm curious. In what way did you focus on product market fit? What signs did
you look for to point you towards it? Seems to be a very important aspect of
success (besides boldness).

~~~
webwright
This might be a too-fancy way of saying "we focused on what people wanted" (to
put it in PG-speak rather than Andreessen-speak).

We started with a permission marketing campaign (before we wrote a line of
code)-- showing a few screenshots and allowing people to sign up to hear about
the launch. That helped us understand how much people wanted it (measured by
traffic and conversion of traffic to sign ups). We were immedietely barraged
by lots of people who had ideas about the product, and we listened very
carefully.

We ignored lots of things that it might've been bad to ignore in favor of
building features that people wanted and talking with users. We didn't
incorporate. Didn't get a bank account. Didn't talk to a lawyer. Didn't worry
about SEO or any other marketing (even though I'm a bit of an SEO nut). Didn't
talk to investors.

Lots and lots and lots of focus on reducing frustration, reducing friction,
and increasing value-- and lots and lots of communication with users (to
understand that stuff better).

Boiled down-- lots of focus on understanding what the market wants (both
individual lifehackers and biz teams that want to be more productive) and then
building/iterating. Rinse, repeat.

~~~
skmurphy
If you are giving a product or service away I don’t think you can assert that
you have “product/market fit.” You have a very compelling application, but
until you figure out who is going to pay you for it, and how much it’s worth
to them, I don’t think you can put a check in the box next to “product/market
fit” since you don’t pass this test from the same Marc Andreessen post you
reference ( <http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html> ):

And you can always feel product/market fit when it’s happening. The customers
are buying the product just as fast as you can make it — or usage is growing
just as fast as you can add more servers. Money from customers is piling up in
your company checking account.

~~~
webwright
Well, revenue is a beautiful thing, certainly. You can define product/market
fit however you like-- but by that definition, most consumer apps don't have
it. A customer can "buy" a product with money or their time/attention. I'd say
both YouTube and Facebook have found a great product/market fit. And Gmail.
Andreessen found a great product/market fit with the Netscape browser, but
monetization of it really only came in the form of a few bizdev deals (which
didn't cover costs, I don't think). Money, in many of these iconic companies,
was NOT piling up.

Regarding my company, we focused initially on a non-paying market (individual
lifehackers), as that was easiest to build for and launch a rough beta for.
They "pay" in blog posts, tweets, word of mouth-- they've driven every single
business lead we've gotten. Now we've got a new market (teams) that we have to
find a "fit" for. Wish us luck!

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uuilly
It's unfortunate, but a polished presentation making a strong case for a large
market share is more likely to get you angel funding than a working product
with relatively few users. I say this after seeing a bunch of angel forums /
VC workshops in the bay area. Many of the "ideal" presentations had no
product, no engineers but a "strong management team," a large market, and a
path to bigness. You are unlikely to get funded without a grand slam story.

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jfno67
This just convinced me to apply, less than 12 hours to go. What is it going to
be. Great read especially if you still hesitate.

~~~
apathy
If you hesitate a lot, try climbing or ski mountaineering ;-)

Either one is easier than having a kid, though. Don't do that until after
you've got a few businesses under your belt, if you can help it. Execution is
a habit, IMHO. Hard to acquire but much easier the 2nd, 3rd, 4th times. Make
it your habit and you will be better off regardless.

Oh, if I'd known back then... fuck, if I looked back on the opportunities
missed (instead of the ones we capitalized upon) I'd slit my throat. But that
gets back to the three important qualities for a (founder|mountaineer|parent):

1) good pain tolerance, 2) shitty memory,

...and I can't remember the other one. ;-)

~~~
mrtron
3) Balls?

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edw519
"they aren’t that much better than many of the great coders I’ve worked with.
They’re just bolder."

Interesting way to put it. Sounds like an critical ingredient for success.

~~~
mixmax
It's also a critical ingredient for failure.

~~~
webwright
I'm a huge fan of "necessary but not sufficient" qualities like this.

A startup needs:

1) Boldness 2) A crazy idea that most people think is stupid. 3) Persistence

All of these things seem to be absolutely required for success. But none of
them is sufficient. Combine 'em with good "product/market fit" (a la
Andreessen) and I think you win.

~~~
run4yourlives
Startups don't need "A crazy idea that most people think is stupid". In most
cases, an idea that most people think is stupid is exactly that.

Startups need to offer something of perceived value, that's pretty much it. In
some cases, it's doing a typical task in a non-typical way, or doing something
non-typical altogether (your crazy idea), or marginally improving your typical
task in a very typical way.

In the end, it's all about value.

~~~
webwright
I disagree. If everyone knows that an area is an amazing opportunity, then
it's probably not an amazing opportunity. Every single runaway success at some
point had a whole host of people saying, "That's ridiculous-- it'll never
work" on some level.

examples:

1) When google was on its way up, it was a well-understood fact that no one
could make real money on search. Oops.

2) When Excite was getting funding, everyone told them that search was dumb.
People would do 1 search and bookmark what they cared about (and would never
search again).

3) The very idea of youtube (giving away tremendous piles of storage and
bandwidth) didn't seem very smart to a lot of people. Plenty of online video
startups had failed.

4) Blogger couldn't get more funding and had to lay off their entire team.

5) If I described twitter to you 3 years ago, would you have been blown away
by the idea?

6) Salesforce.com was not exactly warmly embraced by the enterprise when they
first launched.

7) Marc Andreessen said he was constantly stonewalled by businesses when
selling them stuff at Netscape. "The Internet? Inside our network?! MADNESS!"

Hindsight make these ideas seem obvious-- but at the time, they were pretty
ridiculous.

As you say, most ridiculous ideas ARE really ridiculous. Thus the "necessary
but not sufficient" part.

~~~
run4yourlives
My point wasn't that seemingly ridiculous ideas never succeed, it was that
they are not a requirement for startup success.

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xirium
From the article: I'd rather own 94% of a watermelon than 100% of a grape.

That's a very good metaphor and a very good explanation of why you'd want
funding.

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Mistone
would love to see a bit more depth here, most points seemed rather surface -
"we focused entirely on product/mark fit" - how?, what are some methods you
found effective? maybe best left for a follow up post but after reading it I
wanted more on their successful/unsuccessful tactics.

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tptacek
RscueTime seems like one of the more credible YC startups, with an actual
value proposition and a pretty killer initial user experience.

After all the YC help, weekly dinners, and demo day, this article says they're
still looking for seed funding. Not an A-round; just seed money.

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hafeez-bana
Do you have the screenshot's you used for the first version to get feedback?

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wumi
surprising at 7%/week growth with Tony being featured on so many blogs

~~~
nostrademons
Surprisingly low or surprisingly high? If you think that's low, consider that
7% weekly growth is roughly 3300% annual growth, something that most companies
would kill for. If that can be sustained for 3 years, the company will be
roughly 25,000 times larger than when it started.

~~~
webwright
Yeah, we're pretty damn tickled with the growth (and stickiness-- abandonment
seems unusually low for web software, from what I've read).

FWIW, the 7% week/week was well before any of the press coverage around YC
demo day (and associated splash). We've been 12-14% for the last two weeks. I
expect it to settle back to the standard word of mouth level of 7%. Of course,
I think we have some clever SEO/viral things in the pipeline, which might pick
things up a bit.

~~~
skmurphy
With respect, it's a compelling app but it's easy to give something away. The
real question is how to wrap a revenue model around your offering. If you base
advertising on my on-line behavior it may be viewed as too invasive. Another
key attraction is that it doesn't interrupt me when I am in flow, so you are
probably limited to presenting ads during the analytics so that I am not
interrupted when I am actually working. You've done a good job of addressing
privacy concerns so far, but a local app would be even more secure: why not
offer a version that competes with <http://www.timesprite.com/> the attraction
for me is that their revenue model is clear and I can rely on them being
around for a while. And I would be glad to pay $40/yr for rescuetime as is if
I knew that would allow you to persist in your current privacy model. Your
situation is unstable until you get to at least cash flow positive. It's a
great app, but I would worry a lot more about adding some kind of paying
customers instead of more free users.

~~~
webwright
Heh-- if it's easy to give something away, why is it that so many free web
apps/sites don't have growth? Or happy users?

It's damn hard to give something away online, as it turns out.

But I do agree-- while free accounts will always exist at RescueTime, our
future is NOT as an ad-supported biz. :-)

