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Ask HN: What are some examples of successful companies rejected by YC?
115 points by daniel-levin on June 16, 2016 | hide | past | favorite | 58 comments
Naturally, YC cannot accept everyone that applies. We know that many YC alumni have gone on to be successful, but we don't hear too much about the companies that were rejected and have now gone on to become going concerns. YCombinator is not the only way to launch a startup. How many that are turned away actually continue working on their startups, and successfully?

I applied to YC six times over the last 2.5 years with the same idea - https://yathletics.com . Got rejected every time but interviewed with them twice. The first time I applied was before I launched our first product and had $0 in revenue. The last time I applied, our yearly revenue was almost $1M, and we're still just getting started.

The reason for rejection was same at both times - I didn't have a clear strategy of how to grow my company into a big business. (For those that don't know, YC gives you a pretty clear explanation of why they rejected you and what they want you to do better.)

We make products that our users absolutely love and have seen phenomenal growth, and YC understands that. But it seems like it's very important to them that you are able to clearly articulate what your business will look like in ten years when it's a billion dollar company.

I have no doubt that I will make my company into a billion dollar business. But I simply don't know how I will take over the world yet. I strategize what needs to be done over the next 1 year and focus only on that. Sure, it might not be a trait for successful founders, but I firmly believe that staying focused on building great products is key to my business. The vision for how I will turn this into a billion dollar company will gradually come with time.

This is not just a YC thing, it's par for the course for most SV VC's. Their MO is to spread lots of bets around, expecting 99% of those bets will go to 0, 0.9% may just break even, and 0.1% may be the next Google, Facebook, etc. and make back far more than all their other losses combined.

That's a bit of a simplification and exaggeration, but the general idea is that if you want to raise money in SV you need a plausible case for how your startup will either become a unicorn (>= $1B valuation) or disrupt some really big established thing. YC also has appears to have a preference for technological advances - "breakthrough technology" - over the status quo.

Looking at your website I would have the same question as YC - competent-looking execution and product design, which if continued could potentially make it to >= $1B market cap, but it appears your business model is, at best, attempting an incremental improvement over UnderArmor and the like. What big problem are you solving, or big established things are you disrupting? What new market or industry are you creating? What breakthrough technology are you deploying that enables you to execute better than entrenched competitors in a way they can't easily replicate?

My sense is that's more along the lines of what they're looking for.

This is a great comment, and I whole heartedly agree that the questions you are asking are along the lines of what most VC's will have in their heads.

I don't see my business as solving any real problems. But I believe you don't need to solve real problems to have a business. I can very well frame my business as one that solves a problem, but that would be marketing speak rather than reality. There are billion dollar companies that don't solve problems and that's esp. true in the apparel industry.

I'm not going to delve any further into my thinking of the 'problem solving' approach because there is a more important point that was possibly misunderstood in my original comment. A lot of the responses to my comment are based around the merits of the idea itself, but YC has been pretty clear that they fund people over ideas. The way I look at it, the idea is just a medium for them to get to know the founder(s). There is no such thing as a 'billion dollar idea'. Most billion dollar businesses did not become that way over a short period of time [1], esp. not in the apparel industry. Every company started with something small and what you do in your initial years is just the stepping stone of creating opportunities to become something bigger.

But back to the point - I believe YC uses your idea to understand the founder, and my point was that one of the traits they look for is the founders ability to clearly articulate what their business will look like in ten years. The emphasis here is on the founder's characteristics rather than the merit of the idea itself. So, while I agree with your thought process on what a VC looks for, I disagree that YC looks for the same thing. That's why they are an incubator rather than a VC firm.

On a less related note: I don't apply to YC for the sake of raising funding. My company generates enough revenues, and we have enough positive cash flow and great credit terms with vendors. The value addition I seek from YC is more to do with better figuring out the business rather than access to capital. The reason YC is the only investor I talk to is a very personal one: My company would not exist without HN. I don't have a background in engineering, but since I started reading HN 5 years ago, I really resonated with the community (although I never participated). Back in those days, there used to be more front page articles about startups and the community seemed more tight-knit. I started learning how to code through codeacademy and that was the inflection point that gave me the confidence that I can actually build things, which eventually resulted in me building YA. I worked with many YC companies and still do business with some of them. So, the real reason I apply to YC is because I've gotten a ton of value from it's community and naturally want to have a closer association to them and the partners that run the organization. The sad part is that as they grow bigger (which is better for the world), the appeal of being in the insider community gets smaller. I just hope I get to participate in a cycle before that feeling goes away all together.

[1] Companies like Uber & Airbnb are exceptions

Good observations, will keep that in mind too if I ever apply, and good luck!

A lot of companies with up to $30m potential are unlikely to get funding from what i've seen. Its not that their not worthy or bad ideas, its just VC's are gonna looking for a pie big enough to take their slice from, and to do that your ultimately looking out for the next company which will significantly shift the needle within a particular area.

I'm a runner, and just ordered two pairs of socks! seems like a great business to me. I have no insight into what could/couldn't be a billion dollar business, but I'm also positive that not every successful company needs to be a billion dollar business.

No disrespect to GP, but at a glance, it's a specialty online store. I'm sure it's great and doing well, but it's not a "take over the world" kind of breakthrough idea.

I'd really like to hear a followup on how these socks compare to Thorlos and Balegas.

I like the socks quite a lot. they are much thinner and more lightweight than balegas, but they fit my foot a bit better and they breathe really great.

If you like a thinner sock, these are the best I've tried.

I'll report back! my preference is for Balegas over Thorlos, I feel that Thorlos quality has dropped off in recent years. I'm happy with Balegas, but go through them fairly quickly, as I run 200-250 miles/month.

> We make products that our users absolutely love and have seen phenomenal growth, and YC understands that. But it seems like it's very important to them that you are able to clearly articulate what your business will look like in ten years when it's a billion dollar company.

In life in general the "talk a good game" part plays particular significance in people's decision making even if what is being said doesn't hold water. Of course if your idea is super special in some way or you have some other huge advantage that gets peoples attention that doesn't matter but that covers edge cases, not normals.

Your journey sounds great and more power to you! I too kinda believe that you should build a great product first and figure out everything later, but this attitude wouldn't work if you are planning on to get funding, because that's the first question people ask :|

Do you have any blog posts about how you got started? I'm interested in how tech people can get started in more traditional businesses.

I don't but I plan to write about it soon. I've written some articles in the past that will give you some idea (links below), but I now have supplementary thoughts that I want to add to those articles to give a more complete picture.



With a self-hosted on-line store, why are your prices still relatively high? Wouldn't you open up the market by lowering the MRP?

We've been turned down twice with ConferenceBadge.com, once at the interview. It's now projected to make around $750 000/year. We were rejected for good reasons, it's definitely not a billion dollars business.

More recently we've been rejected three times with Missive, (https://missiveapp.com), still not financially successful, but starting to receive a pretty good vibe from early users + big potential.

I wrote about how we manage the two projects side by side with a small team of 4. https://medium.com/missive-app/successfully-bootstrapped-a-p...

Everyone is biased towards themselves, but still, I think we're a high quality, high achievers team that should have been accepted. You can now troll :).

We will reapply until we are in or until it doesn't make sense anymore. The value proposition of YC is that good + life is an adventure.

> We were rejected for good reasons, it's definitely not a billion dollars business.

That's an important point. YC is an investor, and they're going to reject otherwise good ideas because they may not fit the YC investment profile and objectives. It's not necessarily a judgment on the business.

Hey just a little thing on your website - the headline "How it works?" is a bit weird, maybe it should be "How does it work?" ?

Good catch, I've just removed the "?".

> ConferenceBadge.com ... projected to make around $750 000/year

Nice ! Love how the quarters accumulate (reference to your $.25 pricing per badge)

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If I am an attendee at a conference that uses your software, is the conference required to notify me? If so, do I have any ability to opt out of this?

Here is a list of companies they have funded: http://yclist.com/

If you just look at W15 companies how many have a chance of a billion dollar company? Any company becoming a billion dollar company is very very very small.

I am a little curious. ConferenceBadge seems to be an excellent idea but how did you guys manage to pull off that yearly revenue with that pricing? If I am not missing something, that would translate to like million badges a year.

We are deeply integrated in Eventbrite dashboard + have really good SEO.

> YCombinator is not the only way to launch a startup

It would be a stretch to even say it's a common way to launch a startup

It's a testament to this advertising machine we're currently posting on.

It's actually fascinating along those lines how much of a halo is around something that you read everyday and pay attention to. For example I don't read reddit and never have. If I sat on a plane next to someone important from reddit (except for Alexis) I could care less. But if I sat on a plane next to someone from YC (or even a top commenter on HN) I would definitely be all into talking to them because of the halo.

Rarely is an audio concept given such a fitting visual analogy. Those in an echo chamber do seem to reverberate, or glow, with the energy that surrounds them.

I co-founded a legal startup, and a funded YC company pivoted into our exact space. We applied and never even received an interview. I once did a Show HN about it that made the front page and was immediately removed, upon an email to dang my post was reinstated and I even received a comment/review by a YC partner. The review was overall complimentary, included actionable critiques and even included reasons why he subjectively believe the YC company was ahead of mine.

While the YC company raised well over $1M, the last available data shows their annual income was $80k, my startup was bootstrapped making well over 6 figures and ultimately I achieved a liquidation event.

Was your post antagonistic towards the YC company or removed for an otherwise valid and transparent reason? If hacker news is removing posts by competitors, or giving their startup founders free range to remove posts I should probably start using it differently.

My Show HN post didn't mention the YC company, and the post was reinstated without any revisions of the post itself after I emailed dang.

Can you tell us what the startups did - "legal space" is very large and it's nice to know of successful bootstrap ideas - I think it helps me look out the window for my own

Imagine you get a speeding ticket and wanted to hire a lawyer to fight it (not exactly sure if traffic tickets in the UK what they are in the US...basically a tax on the populace).

Here is the problem: to hire a lawyer, you must discuss your case with a human from the law firm who can evaluate the facts and generate a fee. In other words for a legal fee to be competitive you obviously can't charge the same for a seat belt ticket as a accident with a fatality. But, probably the real truth of the legal industry, especially tickets, is that fees are more often based on what they think a client can and will pay without calling another firm to compare prices.

As far as I can tell this is why the YC company needed to raise funding, so they could hire a staff to evaluate the tickets, act as a middle man between potential client and the lawyer, and then deliver the fee/retain the client. My belief is they are trying to experiment with a single flat fee across a jurisdiction (i.e. $150 for any ticket in California), again a problem because not all cases are the same and such a model is not fair to the client or the lawyer.

What we did was invent a business method to automatically calculate a legal fee for individual cases. Our method allowed clients to calculate their own fees (transparent pricing) and hire a lawyer 24/7 without the need for staff (automation).

Perfect - thank you. There are probably a whole heap of legal and other bureaucratic areas open to this approach - will keep an eye out.

Car park fines being one obvious one. Claiming for late train arrivals (seriously)

We didn't even make it to an YCF interview for https://Userify.com (cloud and on-site user/sudo/SSH key management), but we're now profitable with about 800 companies on six continents. (SSH is used on nearly every Linux server in the world for remote management, so it's a pretty huge market; our tool really comes into its own in a more complex cloud environment, since until you get to a certain size you can get along fairly well with just automating user accounts w/ chef or puppet or by hand.)

We're just getting warmed up. We're increasing investment in our agent (for example, we're developing a Windows Powershell version for when Microsoft releases SSH for Windows later this year, so we'll be cross platform.) We're also announcing our first six enterprise customers as soon as we get approval from their legal departments. Some of our new innovations we're still in the process of filing patents on, so can't discuss, but they're awesome :)

We've decided to not take any seed money at all and just self-fund. We've reached 'ramen profitability', as YC recommends, and now we control our own destiny (although we might pursue a growth round later.)

We were rejected in the very first stage (via email) with no reason given. Even if you get rejected: if you believe in your idea, keep going! Success is driven more by determination and persistence than anything else. Something the size of YC is driven by numbers and just one small issue can tip the balance away from you, so by definition they have to pass on a lot of good ideas. Just go for it.

>> We've decided to not take any seed money at all and just self-fund.

Smartest thing you can do. You have no one to answer to and you can determine your own success.

>> if you believe in your idea, keep going! Success is driven more by determination and persistence than anything else.

This. A thousand times, this.

I've seen so many startups give up because they didn't get their VC money, or get accepted to an accelerator program. I used to tell my partner that you want rejection, you want people to say no to you. This is a numbers game. The more people that tell you "no" means the closer you get to someone saying "yes".

There is a famous story called, "3 feet from Gold" where a man had a mine and worked for years and barely got by with a few gold nuggets here and there. After 3 years, he finally gave up and sold the mine to another miner. The new miner went in and did some geological tests and found out the man was only 3 feet from a huge gold vein. Within months, the new owner was rich beyond his dreams.

The point is, being persistent and not giving up is important because you never know how close you are to hitting that huge vein of gold.

I think the point there is to know how to do those geological tests :)

One very interesting example I know is Algolia. They first applied when they were very early stage, in 2013 if I'm correct. They got rejected mainly because of their poor ability to track user metrics. Then they re-applied in 2014 and got selected for the Winter batch. Last year they raised $18M after an epic roadshow with all key VCs sending termsheets. My opinion is that YC strongly values your ability to be focused, execute and track/analyze data instead of technology and product/market fit - especially in early stages.

Plus one on that. Also because YC already had a similar bet in this area.

Oh yeah I forgot about that, you're right

SendGrid and Buffer are the two biggest I have heard of.

Surely there must be more? Otherwise either their success picking good companies is amazing or the program itself is a huge advantage?

I'm sure there is a lot of King-making going on. There are many talented engineers and getting funded without hassle is a huge boost that will increase chances of success considerably.

Revenue details of Buffer : https://buffer.baremetrics.com/

Buffer is a pretty remarkable company that kinda took me by surprise.

I dismissed it initially as just another business trying to capitalize on the social media frenzy

Since then, they've become a really solid product with a $10M revenue run rate.

More important has been their efforts towards transparency.

Here's a list from a couple of years ago. https://news.ycombinator.com/item?id=7122999

I actually asked this a few months ago. Here is the thread: https://news.ycombinator.com/item?id=11229700


Now educating more software engineers than the UC system.

We also don't hear much about the people that YC rejects which is, in my humble opinion, equally if not more indicative. Because often times founders during YC's program change their idea (I think Ark.com was an example IIRC).

I was rejected by YC in Nov '12 on an idea. I actually applied as a result of the application extension granted due to Hurricane Sandy. A week after applying, I wish I applied with the idea of my current company, MakeSpace.com, which Mark Suster from Upfront Ventures funded less than a week after I received my rejection letter from YC.

I wouldn't change anything because I'm very happy where we are today. But there is hope if you get rejected from YC. What other founders (same or different idea) were rejected from YC but went on to start growing startups?

10Stories was rejected 3 times in the last year. We ended up joining TrackMaven about a month ago and are building our product with them.

Strictly speaking, 10Stories isn't a going concern, but TrackMaven Attribution certainly is. We didn't go forward on the acquisition because we ran out of money. Quite the opposite: we had seen enough traction that the acquisition offer from TrackMaven effectively got us through accelerator + seed round. So we decided to skip the 6 months of dancing around and go right to the part where we are hiring a team and getting early users from the TrackMaven customer base.

We're only 1 month in, but this was clearly the faster path to market. Maybe it could have gone as quickly with YC -- who knows?

A key rejection metric that's likely more important than YC is whether new companies are getting new customers or not. It's convenient that YC also likes this metric.

I suppose Pinboard counts. :-p

My team and I were rejected back in the day for our first startup idea, which ultimately didn't work but we eventually pivoted to a company now doing $100M+ in annual revenues. I don't really blame YC for the rejection as the original idea probably wasn't very good, but just pointing it out there that you can still be really successful without being in YC.

You have to define success. YC is a big accelerant for the right kind of founder and ideas. It doesn't mean all other kinds of founders and ideas are bad - they just have to be able to stand on their own legs to remain sustainable (profitable) and meet their success criteria.

I guess it would be good to understand what you consider "successful." If it's a company that was acquired or had a successful IPO, I would be really interested to see that list as well. I don't know that having been rejected and still being in business would classify as a success in my mind.


We're now post-series-A and growing.

Good founders use rejection for information and motivation. I'm pretty sure the list will be large.

This might not be the best place complain about this, but unless you get an interview with YC, its not a great way to get information or motivation.

Some people use any failure as a way to prove doubters wrong. If a weak football team loses, it breaks them. If a strong one loses, they find motivation to improve.

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