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From YC Rejection to 10,000 Users in 1 Month (with stats) (codiqa.com)
459 points by yesimahuman on March 20, 2012 | hide | past | favorite | 120 comments

Believe it or not I like this being the top story. We know there are lots of bugs in our process and we want to hear the bug reports.

I went back to look at the application. It fell immediately below the threshold for invitation to interviews. I.e. if even one of us had given them a grade one step better, they would have made it to interviews.

When we make mistakes, it's usually in this phase. Most of the time when we screw up it's by not inviting a group to interviews, rather than by interviewing them and turning them down. So this startup is exactly where a mistake would be most likely to occur: in the applications that fell just short of the cutoff for interviews.

The good news is, we'd already decided to fix this problem. We're going to do 3 interview tracks for s2012, which will let us interview 270 groups instead of the 180 we did last time.

If we'd done that last time, we would have interviewed these guys. But last batch was the first time we did parallel interview tracks at all, and we needed to test whether it worked for 2 before we went to 3.

I don't know if I'm going to be able to express what I feel but I'll try.

YC "bugs" are

- startups that are accepted and fail

- startups that are rejected and fail, but would have thrived had they been accepted

(Of course this last kind of bug is extremely difficult to track down.)

But if a startup makes a killing after being rejected by YC it means they didn't need you.

If you consider this a bug, there's some kind of moral problem because it means YC is trying to siphon every promising team in order to maximize YC's success, independently of who YC is likely to help more.

You're not just betting on horses, you're also training them: it seems what you should want to maximize is YC's impact...?

You're confusing YC with a charity. It is not. Trying to invest in teams that will succeed is the modus operandi of virtually all venture investors, YC included.

YC is trying to rewrite a lot of the rules of venture investing, and has had quite some success there, but at its very core it's important to remember that they are investors. At the end of the day, the measuring stick of an investor is their returns, not how many (proto-) companies they pulled from the brink of implosion. As such, your second measuring stick rings false.

I suspect that AirBnb, Dropbox and Heroku are simultaneously among the investments that YC is the most proud of and the companies that would have been most likely to succeed had they not been a part of YC.

>- startups that are rejected and fail, but would have thrived had they been accepted

PG has specifically stated that this is not a bug (it's a feature). The goal of YC is not to take mediocre or bad startup teams and turn them into wins, but to take the winners and turn them into Super-Winners(Dropbox).

As far as maximizing YC's impact, I think Dropbox maximizes it more than small wins from teams that would have lost had they not been in YC.

You're considering success or failure as a binary outcome. It's possible that a startup is accepted and wouldn't have failed anyways, but that being in YC makes it a bigger success than it otherwise would have been (through mentoring or other intervention by YC). My understanding is that is the sweetspot for YC anyways - everyone is a winner there.

> You're considering success or failure as a binary outcome

I think that's how it is, yes, and PG seems to have stated as much; in essence, you either die or don't die; if you don't die, the scale of your success depends on a lot of things that are beyond your control.

(Actual quote from PG: "The formula for the success of a startup includes a random multiplier of roughly zero to a thousand." — http://news.ycombinator.com/item?id=3050280 )

If one subscribes to this point of view then the purpose of YC is to help startups not die, and the purpose of the YC admission process is to

1. select all startups that have a chance of not dying if admitted (eg, refuse startups that don't stand a chance in hell of not dying)

2. if the sample from #1 is too large, reduce it at the low end first (startups that are not very likely to not die) but maybe also at the high end (startups that seem certain to not die no matter what)

Maybe reducing the selection from the high end is just plain stupid / counter productive, but if you don't do that, it's not very clear why one would be in this business in the first place (as opposed to other lucrative businesses).

I think you're both right. Success can be understood as binary, depending on how you interpret it. You either fail or you don't. But YC can help you find that faster than without YC. So there's room for improvement even if success is binary.

These guys got 10k users in a month. But maybe they'd get 100k in 3 if they had YC. Even if you understand that either way it would be a success anyway. It's still reasonable to assume that it would be a worthwhile deal for them. If YC missed the opportunity to help them get even better, even faster. It's reasonable for both sides to treat that as a bug.

I think a more important aspect is that YC is able to connect with exceptional individuals (and groups). Even if one particular group fails they may add talented individuals to their network and connect them with other more successful startups.

I don't really see the moral problem. YC is a group of investors, not a charity. Of course they're going to look for the kind of hardy founders who would succeed even if they got rejected.

Yes, they're not a charity. They're also not a pension fund. To me they look a little like a prep school (but maybe I'm wrong).

The mission of a prep school is to help good students become brilliant; if it becomes stuffed by already brilliant candidates (for example because the admission process is more selective than the admission process of the college it preps for), so much so that there's no place left for second-tier students who would make the most of its teaching, then there's a problem.

I'm just wondering if this is something YC worries about or should worry about.

I see what you mean, since Y Combinator is an institution now, and its selection process has an impact on the overall ecosystem. But let's say Startup A, which is top-tier, would become a $75M company with Y Combinator's help, but would become a $50M company without them. Meanwhile, Startup B, which is second-tier, would become a $3M company with Y Combinator, but would become a $30K company without them. Even if we throw profit out the window (which an investment group doesn't do, obviously), Y Combinator would add a greater total dollar value to Startup A than to Startup B, even though they would multiply the value of Startup B by 100x.

Also, elite prep schools do try to fill their classes with nothing but brilliant students, for a variety of reasons, including money and prestige. There are some negative consequences, to be sure, but it happens. At least Y Combinator increases the size of its classes every year, unlike prep schools.

YC is not like a prep school. It is a win condition for the YC model (really, for any investment system) if so many top-tier companies apply that there's no room for second-tier companies. YC is a business, not a public good.

Many comments to my initial post point out that YC is not a charity. We can all agree on that.

Prep schools are businesses too, BTW. And yes, businesses have a responsibility to their shareholders to maximize profits. But if that was the only purpose of any business, everyone would be selling luxury watches.

YC is not a pension fund putting money in a VC; YC "makes it happen". They invest in very early stage companies because they believe that they can help them succeed (and they do).

In 2004-2005, PG famously predicted the second coming of Apple; if he had put all of his money in Apple stock then, he would be 17 times richer today. And yet that's not what he did. At the same time he was making this prediction, he founded YC.

- - -

I can't seem to explain myself clearly, but I'll give it another try.

The total return of an investment fund is really the return on a very few top investments, which tend to dwarf all others.

Now, if you had a magic prediction device that let you identify for certain the next Google, it wouldn't make sense from a profit-maximizing point of view to invest money in any other company: just put all your money in the next Google and you're done.

It's safe to assume that YC, who have been in business for 7 years (really 14 since they have 2 rounds per year) are getting better at what they do. They should be able to predict who's likely to succeed and who's not, better and better each year.

Therefore in all logic they should be reducing the number of startups they fund: put more money in sure winners and don't fund anybody else.

And yet they're doing the exact opposite: each batch is larger than the previous one.

There can be only two explanations to this: either they're getting worse and worse, and are spreading their bets; or, they're getting better and better and can afford to offer their services to more and more companies.

It seems likely that the second option is the correct one.

  >> put more money in sure winners and don't fund anybody else
That is not their business model. Their model is to take a small fraction of the company for a small amount of money, and then help them succeed.

  >> There can be only two explanations to this: either they're getting worse and worse, and are spreading their bets; or, they're getting better and better and can afford to offer their services to more and more companies.
So far YC has a fantastic return on investment. I imagine that their returns are the envy of many conventional VC firms.

They invest so little per company that they can afford to invest in every company where the expected return on investment exceeds the amount invested.

As they become better known, they get more and more qualified applicants, and thus the number of bets that they make should be expected to increase over time.

Why shouldn't Harvard take all the best students?

I think PG is talking about YC's selection process. A startup applied, was not accepted, but became a success. Selection is the core of YC team's job, and this post is a self reflection on how can they get better. In that sense, this is certainly a bug.

From YC's perspective there are two ways in which they win when they invest in a company. On the one hand they make a return on their investment, classic straight-up utility maximizing economics. On the other hand they help a startup succeed, which is part of their overall purpose aside from raking in fat stacks of filthy lucre.

Even if a company succeeds without YC that doesn't mean that YC's potential involvement is a no-op. On the one hand that represents a missed opportunity for revenue. It also means a missed opportunity to perhaps accelerate the growth of that company beyond what it has managed to achieve on its own.

If a company can only succeed by getting funding though YC, they should not fund it, in my opinion. I don't think those founders are ready yet to start a startup.

I think this is too narrow a range to determine where bugs are in the process.

Bugs in the application process can only really be rooted out by startups that apply and are successful.

Startups that apply and fail could point to a bug in a number of different areas - not just the application process.

If the purpose of YC is to make money and improve startups, than they are failing at both of those things if they pass on startups that eventually succeed.

I don't think that makes any sense at all. Like any organization or group, it is seeking the best. In fact, I would imagine they'd be delighted bringing in folks even YC could learn from. I'm sure PG would be the first to say he doesn't have all the answers and cannot magically make every team be successful. Suggesting it's a deficiency in morality is absurd.

Thanks Paul, we have no hard feelings and are really excited to hear we were that close. We just want to encourage other startups not to give up.

If offered a spot now in YC, would you take it? Not going back in time, but actually, now? If so, and if PG has already admitted it was a mistake, what's to stop YC from offering you a spot in their next session and you taking it? Are there no "re-dos" in YC? Just asking.

I think that decision boils down to what value YC can bring to their company now.

Many of the companies who apply to YC have this much traction... There's certainly a TON of benefit to be had from YC at their current stage.

That's my question -- would YC make the offer now, and would the company accept it? Basically, could there possibly be a re-do? The answer might be "no" for both, but it might be "yes". Is applying to YC and accepting a one-shot deal for all parties, or can there ever be a chance to get back together? From the responses and posts, it looks like it's a one-shot deal - either they accept you and you accept the offer, or there's no chance to get together again in the future.

I don't think much explanation is necessary. YC is never going to catch every potentially successful startup. The process can be refined, but you will never recognize all of them. Averages being what they are, I think YC has done very well. The Codiqa team showed tenacity, and when YC didn't work out for them, they found another route. They are a great example for other startups. None of this should put YC in a negative light.

Never say never. We may always miss a few, but I think we can get better at judging applications.

I can't imagine what it's like to go through so many applicants, so I won't.

A few thoughts:

- It would be interesting to see what made them 181 instead of 179. Would applicants this close to the cutoff get feedback of any kind about how they fared?

- Whoever ranks 271 might be missed out too in the future.

- Has any thought been given to sharing "you're this close" details with the 50 or 100 applicants that were within the proverbial whisker, or giving them a second review to see if any would move up or down relative to their peers in the same range?


The closer a startup gets to the cutoff, the less there is to say about why they fell below it. I talk about that phenomenon here:


I LOVE that you are calling them bugs and taking the selection process very seriously. We (Sandglaz) had a similar experience where we went from 4000 to 35000 users after YC rejection.

That said, interviews and applications are inherently subjective and based on a snapshot in time; they will always have "bugs". It is a tough thing to do, and I fully appreciate the effort going into it.

Best of Luck!

This post seems like a success story, so far. So how is not interviewing them a bug? If you are seeking startups who need help identifying how to get customers and how to create products people want, then it seems that Codiqa doesn't fit. Codiqa has customers and is making products people want.

Said another way, the delta between where Codiqa stands today vs. where they would be had they been interviewed does not seem as large an opportunity as probably the opportunities you made for the companies you did select. Therefore, I'd say there's no bug.

Look at it this way: at least you interview everyone you accept. Most colleges interview only a few prospective students, and that's for a four year program rather than a three month one.

I meant this as a compliment for the hard work you guys do evaluating all the potentials and making deliberate, thoroughly evaluated decisions on who you work with. I'm sorry if I didn't convey that properly.

Here's a possible solution for the future, have YC former accepties conduct proxy interviews for applicants where ever they are in the country(world) on their convenience. It could help you out, unless you feel that the people you accept are unable to help you make your decision. Ivy league schools do it with alumni, YC could do it with alumni.

From what I understand, some of that currently does happen- just not on a huge scale. Alexis is in NYC repping YC there for example.

Are you guys keeping track of statistics of grades for applications? I am wondering if at some point there is a clear cut off that you can safely say we don't need to interview these groups. If it is a linear/gradual decrease I'd imagine it would be very difficult to find that threshold.

The probability that we will fund a startup decreases pretty smoothly as you go down the list. It's not asymptotic at the cutoff. We'd probably have to interview half the applicants to get that last one. Which would kill us.

Interesting...you guys sound more and more like a hedge fund (and I say that in a positive light).

I don't know what to reply except that the very words 'process', 'interview', 'batch', 'moderation' these all exist to bring sanity and order into any system at the expense of mediocrity.

Like someone said "Micheal Jordan would NOT want to be selected by YC".

This means people like Mark Zuckerberg, Larry Page, Sergey brin, Bill Gates, Steve Jobs are not likely to come out of YC. Because the very fact that they have to go through layers of interview sessions, and then spend time performing to you, to get your attention like some performance artist performing to the king to get his attention means that is not going to happen.

Because people screw up in interviews. And a interview is generally no measure what the true story actually is. The guide to cracking interviews and performance is learning how to game the system. If your process is known to people outside,and they plan enough to cover all the corners and deal their cards well, they can game your interview process. That's how job hoppers who can do nothing hop around in circles of big successful companies. The situation from evaluating a 'good product' changes to evaluating 'how good the interview went'.

Nerds, Geeks of the best quality hate all this interviewing, playing-to-the-galleries-business. That is why they wish to build their own firm. Now if you subject them though the same bureaucratic process which they had otherwise go through in a traditional large corporate(Applying, interviewing etc) they are just going to go away, take money from somebody else and build some stuff in the same time.

If I would be building a business and need funding from somebody. I would go to them and explain them 'whats in it for them' and take their money.

But if have to go through the same large corporate styles process for this, I will be spending my time for something else. Because the very purpose my starting a business is to avoid that corporate styles processes.

You have to seriously ask what value you bring, or how different you are from anybody else. If you are just evaluating profit prospects(which I agree, is important), funding, taking profits back. Then really you are just another VC. There is nothing wrong with that. But that is what it boils down to.

Michael Jordan would WANT to have been rejected.

What? Nobody wants to be rejected, ever. Everyone wants to win, always.

Are there any differences between the tracks and interviewing teams (beyond purely idiosyncratic individual preferences/quirks)?

I just want to add one thing: The quality of the presentation, design, and execution is better than many Ycombinator start-ups (at launch day/ first couple of months). I haven't tried the actual product, but from outside it looks neat and well presented.

Now there are lots of pretty damn good sites that YC alumni are making from launch day; but the fact that a good number isn't, suggests that PG might want to improve his filter process a bit.

Now there are lots of pretty damn good sites that YC alumni are making from launch day; but the fact that a good number isn't, suggests that PG might want to improve his filter process a bit.

Do beautiful sites at launch day correlate well with IPOs? I'll supply the answer: no. Many beautiful sites will not IPO. Many tech companies which IPOed had abominable sites at launch day. The long-term salience of this is an amusing historical footnote and nothing more.

> suggests that PG might want to improve his filter process a bit.

I'm not sure how this is related. From what I've observed, PG selects promising founders, not great site-builders. Is it fair to expect all of them to create beautiful sites?

Well, if you are in the SaaS business, I expect that you have a beautiful and functional interface. If you are providing me something not related to the interface, then I don't care. (e.g. I'm using prgmr.com but I don't really care about the interface, their site design or an admin back-end; all I need is the shell).

I understand interface is important.

What I'm trying to understand is, if a team of amazing hackers don't understand site design, html and css - should they be rejected at YC?

yes. If you in theory pick the "best of the best" you expect .... the "best". that include the visual packaging and presentation of the companies products / services.

I agree. Having a great website is very important and these guys look professional on day one.

The pressure on them to have a good website is stronger than for most startups, because they are selling a web development tool.

It's great to see bootstrappers getting some well deserved love. Lots of attention goes to the startup lottery winners and it's good to have a reminder that you really can do it without funding just as well.

Not only that, but the longer you can delay taking funding, the less of your business you'll have to give away.

I hate the thought that getting funded is like winning the lottery. Yes, it is absolutely necessary for some startups, but far too many seem to treat it as an end in itself (presumably there are bragging points associated with being able to say you've been funded to the tune of X million)

Bootstrapping encourages you to keep your costs tight, focus on profit and revenue, ship early, quickly and often, and build something people want.

Bootstrapping profitable companies also have more leverage when ready for funding.

My use of the term startup lottery was meant to describe the communual celebration and veneration of quite often earning some runway.

The businesses that need it are ones that have to find a product-market fit and a repeatable business model. I just think you're better equipped to find validated scalable business models once you've done it without money.

There's nothing quite like having to find and build what people are willing to pay for out of the gate instead of putting it off. From where I see it, I don't see enough technologically complex startups that need a runway, and in hindsight could have been built without funding.

The startups that would, tremendously benefit from the coaching, introductions, and business model development are rare, and special, and maybe that reflects in the small number of startups accepted to Y!. The rest shouldn't consider themselves a failure either... this startup certainly fit the mantra build something people want (and will pay for)

I would like to argue that having success at getting founding is more predictable than being successful at bootstrapping a company. However, I think the majority of businesses are bootstrapped, you just don't hear as much from them. It really depends on business idea if taking venture capital makes sense or not. Some businesses are able to generate money quickly and don't require a large upfront investment, others do.

I'd never heard of Codiqa until I read this post, but I'm glad I did. Really impressive app, I'll definitely be using this to build mobile apps in the near future.

Congrats guys! I wholeheartedly believe in bootstrapping over funding. Keep that company to yourselves. I played around with Codiqa on the jquerymobile site and what you've put together is truly impressive. I've worked with startups in the past and I haven't seen any as well put together.

Need a marketing person? Give me a call.

I've been putting off developing a mobile app for my startup. With codiqa it looks like I can get a decent one going in a weekend. I'm pretty stoked.

Well done guys! Your web site looks pretty great and I'll be trying it out in a sec. I wondered myself if submitting early is a wise decision. I submitted our application a month before the due date but then we changed our idea entirely. I would hope the guys didn't read the original one and moved on.

Edit: I also think that YC should not be what decides whether you create your startup or not. It is great to see you guys kept going. The people that decide to change ideas or abandon their startup because of not getting into YC tell me that they are pretty good at picking people that aren't serious about creating a successful business.

I like the edit. Anyone that would stop working on their startup because they didn't get funded by YC or TechStars probably shouldn't be doing a startup in the first place.

This is what i like to hear! In the future, more and more start ups will be the ones choosing who to get funding from. Power always lies with those who create. Congrats, and keep up the good work!

Max & Ben are some of the best developers in the midwest. Very excited for this project and for them!

Agreed, Great product and Great write up. Keep up the amazing work!

Thanks guys!

Congrats on the success here. You asked for some suggestions in the blog post. I'm going to make them publicly for the benefit of other HNers but if you want rationales and don't want the followup public just find my email.

1) Strongly, strongly consider capturing CCs at signup. Yes, this takes a bit more work. Yes, this will decrease your conversion rate. However, you're going to get more people successfully charged than you do currently.

2) There exist things you can do to increase user engagement with the app which will increase conversion rate from "user" to "signup", even if you don't take advice #1. I have a video coming out in a little while about this. Short version: go take the free trial of Balsamiq Mockups and take copious notes about what they do. In particular, note how Balsamiq doesn't start you out with a blank screen and note the timing and frequency of prompts for you to signup. Implement both of those things. Your conversion rate will increase.

3) You captured my email address for a "paid" signup. Good! I got no email from you. Bad! You should, bare minimum, hit my inbox with "Thanks for signing up for Codiqa. Your free trial lasts until XX/YY." followed by the best three bullet point sales copy you can come up with, linking back to your site extensively. Why? Because I already forgot your domain name (literally true) and statistically speaking I already forgot I signed up for Codiqa. Hitting my inbox is a free chance at recapturing my attention tomorrow when I do my morning email pass.

4) But wait, if one email is good, isn't five emails better? YES! Put a wee little checkbox on your signup form saying "Can we email you a free course about JQuery mobile? Five emails, absolutely no spam, opt out any time." You'll get 40%+ signups. If they sign up, you hit them on day 0, day 6, day 15, day 20, and day 28 with emails of approximately the following format.

Thanks for signing up for a free month-long course on JQuery Mobile by Codiqa, the jQuery mobile design app you used recently. (You asked for this when you signed up. Don't want it? No problem, click here.) This is your 2nd email out of 5. Today's topic is how jQuery mobile cuts app development costs while increasing revenue.

(h2) jQuery Mobile Cuts Development Costs by 50% (/h2)

Paragraph of copy. (~300 words) Link to codiqa docs or blog in here somewhere.

(h2) Another bullet point (/h2)

Another paragraph.

(h2) Another bullet point (/h2)

Another paragraph

Conclusion paragraph goes here. Early in the email sequence the conclusion paragraph just mentions your service, establishes expectations for the next email, and invites them to email you at any time. Later in the sequence you get salesy as heck.

What does salesy as heck mean? By the fifth email you should, if you're good at writing and jQuery Mobile, have your most engaged customers eating out of your virtual hands. The fifth email is less about education and more about one focused case delivered by their favorite jQuery Mobile expert on why buying the $30 a month plan, specifically, today, is the best possible thing they can do to improve their life today.

Execute correctly on this and you will print money. How much money? Just a comparable: for BCC, which is far less sophisticated on the email than this trick is and which has terrible unit economics, I make about twenty cents per email I send. If I tell you how many orders of magnitude that number can be improved by, four different consulting clients are going to demand my spleen sauteed with a glass of chianti.

5) Charge more! Or at least give an option for charging more. $30 a month is rat droppings to a business doing mobile development. (You will not get that feedback from some HNers. That's OK. Five hundred HNers refusing to buy your product plus one business charged $500 a month = $6,000 of revenue a year.) Put a $250 a month plan in there. You will sell it, to someone who a) does not need to pay $250 of his own money to buy it and b) receives well in excess of that much value from your service.

@patio11 If I may ask you a quick meta question: How much time do you spend writing a post on HN? I noticed that in contrary to when I joined, most of my posts get voted up, but I also spend more time then I should writing and rewriting them. Writing as many high value posts as you do would be unsustainable for me (even if I could). Do you just have an incredible natural talent in writing, so that you pull those posts out while having breakfast? Or is it years of practice, in which you perfected this skill?

Thank you Patrick, great ideas! We did start with the credit card being required. We took it out so more people could experience the premium plan before knowing if they want to buy. To be honest we didn't leave it like that for more than a week so I have no data on it.

Also, I agree, our pricing is too low. Our focus right now is on developers who can use Codiqa for work purposes. That has a higher value than $10/mo.

We are going to experiment with some of these ideas and blog about them. Thanks again.

Strongly, strongly consider capturing CCs at signup. Yes, this takes a bit more work. Yes, this will decrease your conversion rate. However, you're going to get more people successfully charged than you do currently.

Does anyone else have any other opinion on this? I am currently trying to decide whether CC should be a mandatory field or not for my app (which will have a 30-day free trial). What kind of impact on conversion are we talking about?

You'll lose a lot of signups. On the other hand, your signup-to-actually-pays conversion gets dramatically higher. (Appointment Reminder captures CCs at signup and will successfully charge north of 50% of those accounts at least once.)

I am extremely reluctant to give anyone my credit card number. If I used your free service and it works great, I will consider it. But the chance that I will give my CC number to a service I have just heard of is basically zero.

I understand that have data on this and the customers who converge outnumber the ones that you loose, but it might diver per demographic. Paying with credit cards is less common in Europe than in America, so that might play into it. What might help is get a seal of approval from some organization that you are safe. If you have social proof it's even better.

EDIT: I might also be worth considering if non-paying customers are really just a liability to you. I understand the bottom line is what counts at the end of day, but free customers might recommend your service to someone else or they might come back later when they really need your service.

Perhaps you are one of the Five Hundred that he mentions above, then?

It would be ok to lose signups from people who would not ever buy your product, but I don't think that's the case.

I for one, subscribe to a lot of SaaS but would never put in my CC number just for a trial.

And what about corporate customers? I think many subscribers can come from corporations where someone somewhere tried the product and liked it, and then made sure his company paid for it. If he had to enter his CC# before he could even try he would probably not do it.

#1 least useful insight to be gleaned from HN for people selling software:

Data points of HN readers who would never do X or would be annoyed by Y in the process of evaluating your software.

Fixed typo.


I think the target population matters. If you're selling to teachers or dentists, then you should speak to teachers or dentists to learn what they will do or not do.

If you're offering a jQuery framework, then HN seems pretty relevant as far as the people susceptible to subscribe to your services.

Don't sell software development tools to HN'ers.

I was thinking that I would be reluctant too, but then I realised that I have given plenty of SaaS companys my CC up front - sometimes not even for a free trial (but usually with a moneyback guarantee). E.g Linode and JungleDisk.

On the day after the CC charge - do you have people terminating the account? Somehow, I feel this might lead to people forgetting their 30-day trial and will terminate when they realize they have been charged. Ofc, it's their problem if that happens. Curious, and just hypothesizing.

Every subscription business will have a) people who pay for but don't use the service and b) people who pay for but don't use the service and ask for refunds. If you ignore your emails telling you "Thanks for signing up for AR, friendly reminder, your trial ends in 3 days." and the subsequent ones reminding you every month, I'll happily take your money rather than second guessing your business decisions. (I used to pester people about that but plural people literally said "Stop pestering me! I get it! We bought it now but won't use it until March. No I don't care about paying extra! Its like $80 a month, why would I care?!")

I get a notification when anyone unsubscribes and, if it looks sort of borderline (e.g. sent one test phone call on the first day, never used the service again, and then canceled on day 33) I offer to refund their money. I get about 50% uptake on that. This makes me sort of anomalous in the industry (take a look at e.g. 37Signals policy on refunds -- "We. Don't. Refund." -- which is much more common) but it works at my scales because AR doesn't have so many accounts at the moment that sending an email or two a week is a big tax on my time. (And, of course, I don't lose sleep at night over $9 or $29 or $79 in revenue. It is literally rounding error for me -- if the yen hiccups that is much more painful.)

At the risk of stating the obvious: the business model is not hoping that people will forget about their subscription to Appointment Reminder. The business model is in convincing them to log into the site every day, run their business off AR, and call my cell phone at 3 AM in the morning to scream at me if anything goes wrong because that way I can get them to pay me thousands of dollars.

AR looks interesting, but for this to work internationally, it needs to support other languages.

We had a 30-day free trial for our app as well. We had basically zero conversions from trial to paid. Once we changed it to a 30-day money back guarantee, we started getting subscribers. Only about 20% cancelled during the trial period. So the difference for us was night and day.

A note, in our case we used PayPal for subscriptions.

Somehow charging at trial signup doesn't _feel_ right to me. Even if you are able to charge once and then users ask you to cancel, this means they never would have paid if you had not asked for their card at the beginning. What use is revenue if customer isn't likely to have used the service or doesn't need it (but simply paid because you automatically billed them)?

However, as a way to weed out non-serious users, I can understand the rationale (but then again you would let go of publicity effect).

Great questions! The idea is not to charge them on day 1. The idea is to charge them on day 30, just like you do right now, but collect their CC (and revocable permission to charge it on day 30) on day 1.

You're not trying to get people to forget about the service and pay for one month then cancel. That's not a long-term success for the business. You're trying to extract a commitment to pay money because extracting a commitment to pay money automatically increases their perceived value of your service, their engagement with it, and their likelihood of paying for it.

Forcing the decision-point until when the trial is over will cause them to discount the value of their software because a) they've already consumed it or b) they haven't had time to look at it yet but have had time to totally forget your sales copy about it. You want the big decision point to come at their moment of maximum perceived desire for the software: when they've just come to your website with a headache and you've just told them you're selling aspirin, the magic cure for headaches. At that moment they burn with desire for aspirin, so get agreement in principle that if the aspirin cures their headache you get paid, rather than saying "Take this aspirin and then let's talk about how much you value not having headaches four weeks from now."

After you get people to make the decision, all of their future actions will tend to reinforce that they previously made the correct decision. (People hacking 101.)

Thought, someone else brought up a point that the person visiting the landing page might not be willing to use his/her credit card when trying to sign-up on a company's behalf. So, does it also boil down to the kind of market you are selling to (when the end-users are not independent decision makers)?

I don't know about most companies, but every single person who would have been in a position to buy software on the companies behalf could have easily pulled out their company credit card or the sheet of the paper that each department had with the credit card info on it and bought the software.

These companies ranged from 2 people to 400+ people. Most SaaS offerings are under $50, which seems to be something that most business people won't hesitate about spending money on and certainly wouldn't require someone to go to someone else to approve.

If this is the case in your company you're wasting a lot of time!

Hey Patrick do you do a pre-auth when you take the CC number as well I assume?

I believe SEOMOZ has a thirty day trial but you must give your CC (cancel at any time). They offer some services for free to non users, but they are throttled by cookie/IP so that after the third or forth query in a certain time span, they hit you up with the sign up page.

Great idea and it does look very slick and well executed, but from the little playing around I did it just didn't feel as fluid as a desktop app would. I'd definitely prefer a native desktop application to html and js, perhaps with an option to view and tweak my creations with the web interface when I'm off site.

Y combinator should only be one of the avenues to be explored by an entrepreneur. My team (PayGuard) submitted an early application hoping that they would have more time to look at it, we still plan to update it before the March 28 deadline. We will apply again in the winter if we don't get in this summer since we're already quitting our jobs anyway. Getting accepted in the program will certainly jump us in the fast lane but we will not even slow down if we don't get in. My team have debated and made improvements to the idea for the past 6 months then we realized that the time for theorizing has ended and the time for building a product is now. We can't wait to test this out in the real world because we think there is a serious need for a payment system specializing in long distance and cross-border transactions.

Any chance you have screenshots for Gobuzz, or a more thorough explanation of product, or feature list?

Gobuzz was basically google alerts for people and companies that matter to you. We would send you an email each day (or more) with news about these people and companies. Near the end we also supported NLP stuff to find new people mentioned alongside your important contacts.

I still think it's a missing piece of the news world, but we lacked experience and did not dig in and focus.

I am working on what could be considered an MVP for GoBuzz. Did you guys use Google Alerts and souped it?

No, we did the indexing and searching ourselves utilizing Solr and using a document service (can't remember the name, starts with an S, which was pricy). This let us take out a lot of "fuzzy" tokenization requirements and rely on pretty exact matches in content. I'd love to talk more about it with you. My email is in my profile.

Definitely will do. Thanks.

Am I reading this right? 10,000 users - 1,400 on free trial = 8,600 paying subscribers.

If so, congratulations! =)

The blog has a graph showing around 1500 paying customers, which is still amazing (nearly $15k / month revenue!). I'm guessing the missing 6000 odd are staying on the free plan.

Sorry, that's misleading (though I do wish :)) There are about 1500 customers in a trial plan that hasn't expired and doesn't require a credit card, so we will only convert some percentage of them to paying customers.

However, we just pushed an update last night that has dramatically increased our conversion rate from free to paid trials. Only time will tell by how much!

I'm surprised the potential here wasn't recognized; seems like a no brainer given the target market (one that's growing ridiculously fast with no signs of slowing down) and the obvious level of quality! Of course what doesn't look like a no brainer with the benefit of hindsight ;) Out of curiosity what change did you make that led to your conversion rate increasing so dramatically? You mentioned something in your post too, but didn't elucidate.

For the free builder we added a feature to immediately upgrade and save your work in progress in your dashboard, instead of just telling you to upgrade, forcing you to decide between losing your work or doing it all over again.

so the avarage conversion rate is about 8%? that's very good :)

I played with your app on the jquerymobile site... what immediately frustrated me is that it doesn't seem to be possible to align elements to the bottom of the frame. At least have an option for Footer elements!

Checked out the homepage on FF 11.0 and the gray text under "Pure jQuery Mobile" shows up as an unreadable light gray (vs. Chrome where it shows up fine). Might want to check that out.

Hmm. Thanks for pointing that out, we'll look into it!

Compliments on the execution of your site, platform and branding. This is well deserved success. Keep pushing and reapply to YC, I you want to, you'll make it!

Congrats guys - very interested to see what happens when the free trial period ends for the users who joined after Codiqa showed up on the jQuery Mobile site.

Really cool. Something that I'm going to look into in the future - one of the very few online tools that I might actually use!

It just goes to show that even though others don't share your vision, you shouldn't necessarily give up on it.

Well done and looks quite useful - bookmarked for the future. However, I have a really hard time reading some of the copy (contrast) on my laptop: http://i.imgur.com/fRzAe.png

What browser are you on? Thanks!

Somewhat off topic, but what do you Codiqa guys think about Sencha Touch 2?

Codiqa seems really awesome. I bookmark it for this week end : There is StartupWeekend in Oslo. I will advertise it there and I'm sure you will get many subscription from Norway this weekend.

I disagree with that. A lot. The Pricing page is one of the most viewed pages on a typical app sales site (in my experience, at least), and the one that does the lion's share of the selling. People head to it straight away for a reason, and they need to be able to find it without effort - hence the obvious title. It's too important to not be bold and explicit.

Which is why I didn't take my own advice this time around :)

What's wrong with "Plans & Pricing"?

This is just a guess as to the reasoning:

You could just put "Plans", which because you're selling something implies it has a price.

"Pricing" sounds like you're raising the issue of cost too quickly (on the landing page). Give them the value proposition of the plans, then tell them how much it will cost.

For other options, there's always "Products" but that makes me think you have multiple products (Product Suite, Standalone 1, Standalone 2...)

I always happen to look for "Plans & Pricing" these days; it's one of the things I scan for.

He may be right for the population in general, but I can tell you that the "Pricing" header is something that I, personally, immediately look for.

No point wasting my team reading anything on that site if the price is out of my league.

Edit: Apparently just like you.

Guilty as charged. Thanks for making me chuckle. We didn't put the "See" in front though :)

users , revenue beats everything else. well done.

Congrats guys! And way to represent Wisconsin!

Gotta admit,

I was blown away by the builder interface design.

Well done, guys.

Since you guys are at it, may be I can ask.

Is there a little something extracted from jQueryMobile, which lets me use only 'form-styling' of their otherwise huge piece of work? I want only the relevant css and javascript out of the entire thing.

Any help would get a huge hug from me. And thanks, in advance.

BTW nice work with Codiqa, I am in. [Edited for grammar]

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