In this case, the breakage was not only on the bad end of the spectrum, but we weren't told about it till the last moment. IIRC Jon told us an hour before he got on the plane here. That affected our decision more than the breakage itself. At the scale we operate on, we can't afford to have people around who aren't upfront with us.
I'm glad Jon got funded though. As he says, I was quite enthusiastic about what they were working on.
Some hackers just want to be Karl Rove. The problem with that is unless somebody tells you about Karl Rove, you'll think all the pawns he puts into place are the ones who are irreplaceable. They aren't, though you might mistake them as such because they are the public face of operations.
It's not common, but also not rare for teams to have the invisible Wizard of Oz who is really pulling the strings behind the scenes. Neither Ferrari nor Michael Schumacher have won much since Ross Brawn parted ways with them as technical director. Yet he managed to take Brawn GP (formerly Honda F1), which was a joke of a team, to both the Drivers and Constructors championships in its second year with him at the helm (first as Brawn GP). While even more variables are at play, take a look at the LA Lakers with and without Jackson as head coach. Then tell me how many people attribute Kobe to their success and don't really ever mention Jackson's name. Would Apple have been the same company (wait for it) had it not had Jonathan Ive?
I'm not quite sure how YCombinator would accept this business based on one co-founder and then dismiss them when he was the only one left. Not being upfront about things would definitely be a warning sign. But again, in his mind, you accepted the business based only on him. Why would it be such a big deal if the two other co-workers left? I've read some other comments about it being a vote of non-confidence in the business. Talk to 95% of employees in companies and probably 2/3s of partners. Secretly, they think the company is going to hell in a hand basket and will be dead or in serious trouble in 2 years time. It's human nature to be skeptical to the point of fearing a business' prospects; Maslow's Hierarchy and all that jazz. A startup doesn't satisfy very many of those levels... people get antsy.
What a surprise I see "Los Angeles."
But I used to watch the Lakers religiously. In fact I've got a signed jersey from Eddie Jones hanging up right now. One fan appreciation day starters were meeting briefly with fans, who could line up to meet Shaq, Kobe, Eddie and others. My friend and I chose Eddie Jones who was our favorite Laker at the time.
But if I understood correctly:
1. he was not planning on applying to YC, you asked him to
2. he had a good living situation and local contacts, and you asked him to move to SV
3. he had a functioning company wit income and co-founders, and you asked him to do something (move to SV) that blew up the company
As he makes all these sacrifices, in a very short schedule, you decided that you no longer wanted to fund him, as he turned up, suitcase in hand.
It is fine that you did not want to fund him into your group, and that you have well-tested criteria about co-founders.
But the guy made sacrifices for you and YC, and from what I understand, you / YC dumped him in the last minute.
To me, relationships are built on moments of truth. (Not my phrase, I heard it from the CEO of a health insurance company.) What do you do when things are going badly, rather things are going well.
Perhaps you are being modest, but I cannot see any mention of anything you did to help him, now that he was in a foreign city with no connections and no co-founders, trying to follow your instructions. "Apply for the next YC" does not count as help, and the ability to mention that you had accepted him previously does not count as help either (although I am sure he used it in his self-introductions).
Good on him for finding funding, and of course he is a good entrepreneur for picking himself up and continuing, and you are a good spotter of entrepreneurs for selecting him in the first place. But to me, this story does not reflect well on YC.
For "We didn't push to apply to YC", the original posting had said "I hadn't really considered an incubator like YC because we already had a product, customers, and whatnot and I thought I really just needed cash to hire a bunch of people. But one of the guys at breakfast really liked what we were doing and wrote an intro email to Harj, one of the partners at YC. It was mid-May so the application deadline for the Summer 2010 session had already passed. But Harj and I had coffee the next day, and he liked what he saw so he invited me to come interview for late acceptance."
And for "he definitely didn't split up the company for us", I was going on "So the day before YC started, I sent Paul and the gang an email letting them know that my team was changing. I didn't think it would be a huge problem. I (naively) thought that they'd just give me advice on how to navigate the new situation. But alas, Paul was not happy with the changes and told me it might put us in jeopardy of getting funded by them." In other words he did not say that you had told him the company should stay put, you had told him you would not fund him, now that the company had split up in trying to fulfil YC's requirement for SV location.
By the way, I am entirely aware of a third possibility, i.e. that you are both right, and that two different people can have correct but different memories of the same situation. But the story as it was written did not make YC look good, even though the author is promoting it with cheeriness as coming through adversity.
Times were crazy, and missteps and miscommunications may or may not have happened. But I've got nothing but love for these people. Going forward, I'm way more interested in being "a guy with $1.5m looking for top people to build an amazing company with" than "the guy that got kicked out of YC".
Thank for going to bat for me, though! :)
You have misinterpreted what he wrote. Specifically the phrase "now that the company had split up" is false. The company had not yet split up. He had (at most) a verbal agreement with his cofounders that they would split up the company in the future, but they had not acted on it yet. Our advice was not to.
In a lot of situations in life, you have imperfect information and you have make the best judgment call based on what you have. Maybe those 2 guys didn't go to YC because of family obligations although they'd really love to, but maybe they just thought the startup team didn't really have legs and was just a side project.
At that early in the game, the 2 cofounders knew the author better than PG did. I'd make the same call.
My knowledge of this is limited to reading the comments here and Jon's blog post, but it's fair to see YC's side as well on feeling a bit blindsided. That's what I read between Paul's lines, anyway, specifically since he used the phrase "up front with us".
Not pointing fingers or anything, just understanding both sides and responding to you specifically.
I'm not sure if it's intentional, so I apologize if it isn't and I'm completely off-base. I mean no disrespect, and I'm just trying to understand what I'm reading.
I'm reading a bit of exasperation from you that you weren't provided enough time to make life-changing decisions by YC. It almost sounds like blame, even though your blog post leans the other way. Whether you overtly admit it or not, it sounds like you hold a bit of a grudge that you lost out on that YC round because you weren't provided enough time to uproot your (and your cofounders') lives.
Based on Paul's response, it sounds like they had wished they'd have known in that garden meeting that perhaps your cofounders weren't on board. I don't think it's an unfair assumption that you knew, when you pitched YC, that your cofounders had families and were rooted. I think Paul is expressing disappointment that he was blindsided by you hours before YC started with something hitherto unmentioned. Is it unfair to say that perhaps you should have expressed at the initial meeting that the next round might have been better?
I can't imagine YC would have pulled funding from you had you said, at the initial meeting, "can we please shoot for Winter? this is a big deal, and I know your round starts soon, and I want to be respectful of my cofounders and give myself time to get things together". I'd have considered that a sign of wisdom, personally, and gained a lot of respect for you.
My take, anyway. It worked out in the end, so bravo.
And to clarify, I don't blame YC at all. I love those guys. I really admire Paul and sometimes even quote the few interactions we've had. I think he's a genius and seriously hope we can work together on something one day. (Hi, Paul!)
In my comment above, I was actually just trying to explain that everything happened very fast. I tried to update people as best as I could. It was just a very crazy week.
Unfortunately there was no way for YC to predict the Jon had these chops at the time. The fact that YC can make such predictions with high-accuracy, from simply an application and a 10-minute conversation, is very impressive. There are bound to be borderline calls now and then.
If you have de-identified application data, it would be interesting to know what early patterns in applications predict future success.
 Jon hustled his way into YC, found a way to make the move when his co-founders weren't willing to, kept the company running and profitable meantime, and closed a large seed round with top-notch investors, in perhaps roughly the same timeframe that he would have with YC.
Sounds like it was more "our team was accepted even though they had no idea what I was up to, I subsequently lost my cofounders, and Y Combinator revised their decision based on that."
I'm surprised that YC accepted "them" after meeting just one of the co-founders. Also, what is not very clear is why he went by himself to get money and how he continued the company by himself without his cofounders. Meaning that it sounds like it's just that they didn't want to move to SF with a week-notice, not that they gave up completely on the startup...
As to how I was able to continue, as I explain in the article, they spun off a t-shirt printing business that we had been running. It was a more predictable business. Less risky for them. More of a 9-5 thing with a steady income.
To be fair, they still believed in the business. They just didn't want to tattoo it across their face and sell their first born son like I want to.
(FYI for the downmodders: that's what's called a sick joke)
That, or a sitcom.
This was the first time we had a late application process and I made the mistake of not insisting that Jon submit an application form. That would have surfaced the issues much earlier. We've since established that we won't fund anyone without them filling out an application form and meeting all co-founders in person.
Congrats to Jon, that's a fantastic list of investors to have.
No co-founder....no soup for you!
To be fair, they did get accepted based on having the whole team.
Do you think you would have been excepted if you applied as just yourself?
I can only guess that Y Combinator really values co-founders because the patterns I've seen in 10 companies must be painfully obvious with 100 companies. That's not to say that there won't be outliners/exceptions, but when you're placing bets...
- Jon (The guy who wrote this story. :)
But then it's like he's bald.
"What? they don't count as 'co-founder''? you must be kidding, this is XXI'
Anyways, Yuri Milner (with Ron Conway) recently announced a blanket offer to all YC companies: $150k in no cap convertible debt. The title could have been to a story where a YC company dropped, presumably forfeiting the offer, only to be tracked down specifically and offered much more.
Edit: rephrased my question a bit, still seems awkward...
Applying with co-founders and having them disappear is probably worse than applying as a single founder, because co-founders jumping ship is one of the things that often happens shortly before a startup dies. I'm sure YC was acutely aware of this pattern, and that makes the Storenvy story all the more impressive.
I was asking Ray what made him an exceptional single founder.
If that is what happened, they deserve some scorn for playing with a person's life like that. That's just not on. If, however, they were clear about their reservations and just wanted to meet the guy again to discuss, it was really stupid of him to transport himself from his home to a hotel.
Such a cavalier attitude to risk actually might be a very good reason that this guy should not be running anything, and YC made a sound choice.
Either way, don't know any of the actors in the story and wish them all the best. Thanks for sharing this rather strange story.
I read this story very differently. Jon was fearless, took a calculated risk, and, when the initial outcome didn't role in his favor, just kept plugging in the face of obstacles - to his success.
If you think that "Flying out to Silicon Valley on a reasonable chance that Y Combinator was going to fund his startup that already had a community, but with several months of cash regardless of that funding" is a cavalier attitude to risk, I would love to think what your thoughts about what some of the _really_ hair brained things that startups do to become successful.
The sheer _act_ of deciding to create a startup is easily one of the most risk prone acts one can take - so, ironically, per your logic, anyone who does so should not be running anything. :-)
I loved the story, loved how he rolled with the punches, and loved his positive attitude at the end towards everyone. I have almost no doubt that he's going to deliver great things.
1. He married a woman who is extremely supportive and dialed in.
2. He had a savings that he could fall back on. So, getting kicked out of Y Combinator was heartbreaking but not soul crushing.
Basically, he had some good protective factors which made it possible for him to take risks.
Congratulations and best to you and Storenvy.
I talked to Paul on the phone as I was boarding the plane and he told me, "I don't know if I'd come out here just yet." But I didn't want to miss the first dinner (still naïvely thinking things will work out). He definitely gave me fair warning and I knew the risks, but it seemed silly to turn around at that point. I knew I could always fly back home in a few days, if I needed to. It was worth the risk. And in hindsight, I'm insanely thankful I got on that plane.
Once again good luck to you!
The next morning, Paul emailed and arranged a meeting with the entire YC team for us to discuss the future of Storenvy in YC. Since we didn't have a car, and I didn't have enough time to figure out something better, Janette and I took a $100 cab ride down to Mountain View. ..."
Anatomy of determination.
I'm curious why you list SF as the location, giving how well everything started out for you even though you were spread out geographically.
I wish you the best of luck on your project, it is a true inspiring story. Congrats
I would say figure out a way to monetize it in the short-term (perhaps transaction fee on all the sales), that way, your sellers can be confident that you are a going concern.
Just my $0.02.
To me the story speaks of the rewards of true hustle. That and making sure you're family is 100% involved in your start up too, as his wife sure helped too!
This is about the future! We could sit around and dissect events from the past all day long, but I'm way more interested in building a team and destroying the e-commerce space together. If you're a UI designer or Ruby hacker, please get in touch! :) http://www.storenvy.com/jobs
Originally YC alternated between Boston and Silicon Valley. However they have now changed to always operating out of Silicon Valley. So you have to live there for that period.
This does not stop companies from moving there for 3 months and then moving back. As a notable example, Wufoo is based in Florida.
After reading this I'm even more excited to be an investor
Rejected != GotKickedOutOf