Jessica Livingston at Startup School 2012
Hi everyone! This is so big league this year! I can't believe it. We have like this team of people in the back helping. There's real chairs, and look how many seats there are! This is so exciting.
Um, I'm Jessica Livingston. I'm one of the founders of Y Combinator, and it's been more than seven years since we started YC. In that time, we funded 467 startups, so I've seen a lot of patterns. Thank you! I was a little nervous back there, so thanks!
Um, there's a talk I always want to give at the beginning of each batch, warning everyone about stuff that I know is probably going to happen to them. I finally wrote down my thoughts and I'm going to share it with you today.
So, we all know that lots of smart and talented people start startups. On the left side, there you see huge numbers of startups getting started, and yet if you look at the other side, a few years later, there's actually only a handful of startups that are big successes. What's happening in the middle there that's causing such failure?
It's like there's a tunnel full of monsters that kill them along the way, and I just want to thank Minno Monsters for providing me these fabulous cartoon monsters. So, I'm going to tell you about these monsters today, so you can know how to avoid them.
In general, your best weapon against these monsters is determination. And even though we usually use one word for it, determination is really two separate things: it's resilience and drive. Resilience keeps you from being pushed backwards, and drive makes you go forwards.
One reason you need resilience in a startup is that you're going to get rejected a lot. Even the most famous startups had a surprising amount of rejection early on. Everyone you encounter will have doubts about what you're doing—whether it's investors, potential employees, reporters, your family, and friends.
What you don't realize until you start a startup is how much external validation you've gotten for the conservative choices you've made in the past. You go to college, and everyone says great. You graduate and get a job at Google, and everyone says great. Well, what do you think happens when you quit your job to start a company to rent out airbeds?
This is Airbnb's website when they first launched in 2007. I mean, look up there where they explain what they do. It says two designers create a new way to connect at the IDSA conference. I've never even heard of that conference! And over on the left, it says list your airbed. It was only for airbeds!
I mean, it's unbelievable. This is not the sort of thing that you get a lot of external validation for. Almost everyone is more impressed when you get a job at Google than if you make a website for people to rent out airbeds for conferences. And yet, this is one of the most successful startups!
So even if you're Airbnb, you're going to start out looking like an ugly duckling to most people. Here are the Airbnb founders when they did YC back in early 2009. At this point, they'd already endured tons of rejection. You should check out Brian's talk from the 2010 Startup School—it's a very inspirational story.
Um, but by the time they came to us, they had maxed out their credit cards. They were eating leftover Cap'n Crunch cereal. They were at the end of their rope, and everyone thought their idea was crazy. Even I actually did! But they knew they were on to something.
And during YC, they made some key changes to their site. They talked to users, they set their goals, and they measured everything. And the graphs started to go up! Remember that new ideas usually seem crazy at first. But if you have a good idea and you execute well, everyone will see it eventually.
We funded Eric Migicovsky about two years ago when he was working on Impulse, the predecessor to the Pebble watch. Eric was a single founder, and these watches have something in common that terrifies investors: their hardware! Poor Eric had a really hard time getting funding. No one wanted to fund a hardware company.
He met with more than like 30 investors who all said things like, "I love the idea, but I can't fund a hardware company." Some claimed they just didn't fund hardware companies as a rule...