Jessica Mah at Female Founders Conference 2014

Jessica: Ma is the founder and CEO of indinero, a company that takes care of counting payroll and taxes for businesses.

Jessica founded her very first company in middle school and started indinero from her UC Berkeley dorm room, where she was studying computer science. Uh, Jessica was part of the YC summer 2010 batch.

"Welcome, Jessica. Thanks for the great intro! Let me just test this clicker out here."

"All right, so my name is Jess Kama. I am the founder and CEO of indinero. I went through Y Combinator in the summer of 2010 and my story starts at UC Berkeley. I studied computer science and while I was there, I was the president of the Computer Science Undergraduate Association. One thing that I really loved doing was inviting other founders to come speak to the students. I really wanted to get my CS classmates to think about starting their own startup."

"And the first person I invited was Drew Houghton, who was the founder and CEO of Dropbox. Then I got Sam Altman from Loopt. He's now the president of Y Combinator, as you all know. They said I should really consider applying to Y Combinator, and I hadn't really considered it at the time. I thought, well, I'm not sure if I want to do Y Combinator. I don't know if I want to give up all that equity. And they said, just apply. Worst case, you get in and then you decide not to do it. It's not such a bad worst-case scenario."

"And that's what we did. My co-founder, his name is Andy; he was my best friend. He's still my best friend, and we did all of our computer science projects together. We're really close, and we knew that we didn't want to get real jobs after college. We just wanted to go straight into doing our own startup. And we're just friends; we're not dating, nothing crazy. A lot of people would ask, are you like siblings? Are you like married? What's the deal? And I'd say, we're just friends."

"So we put in our application for this idea called the Mint.com for businesses. A lot of people would say, why accounting? That sounds like such a boring idea. Why not like Facebook apps for something more exciting? And I said, and I thought, well, I'd run my own small business before and accounting was just really hard to do. How about we do something that could actually make a difference for others?"

"So that was our idea, and we went through Y Combinator. We were really excited; we weren't scared at all. We were on the top of the world. We thought we were going to get lots of PR, we're going to raise all this money, everything's going to be great. And that's what we did. We got lots of PR. This is Fast Company interviewing me at our home office. And we thought, we'll get PR, we'll get users, and we'll use that to get even more PR. And that's what we did."

"Here's Fox at our office, and after that we raised a lot of funding. We raised 1.2 million in funding, and the first thing we did with all of this new money was, of course, get a fancy office. There's the hot tub in the back, and I remember feeling like we're going to be the next Intuit. And we told people, I remember at Demo Day one of my slides said, we're going to be the next Intuit. We were that confident."

"I was able to get one employee who worked at Google. He was getting paid something like a quarter million dollars a year, and I got him to quit Google work at indinero for minimum wage and 1% equity. And we both thought this was a great idea, but in hindsight, that was a terrible deal. Uh, needless to say, he didn't stay there very long."

"And the biggest problem we all talk about is hiring, hiring, hiring. But there’s one investor I was meeting with, his name’s Anton. He was the VP of Business Development at Mint, and we've become really good friends over the years. He asked me, 'You're talking about hiring, but have you ever fired anyone before?' And I thought, no, I've never had to fire anyone before. And he had this evil grin on his face. 'Jessica, you're telling me that you have all A players; you don't have any B players? Your team is amazing.' And I'm thinking, no, that's not what I'm saying at all. I didn't fire anyone not because I didn't have B players, but because I just didn't really have the courage to fire anyone."

"And he gave me that courage. So the next week I fired my first employee, and little did I know that a year from that moment, none of my employees would still be working for me anymore."

"The debauchery continued. Here is us throwing a YC reunion hot tub party at our office, and all of our vanity metrics were going up. We had a lot more users. We were tracking not just millions of dollars in assets; now we had billions of dollars, and we thought these are numbers that investors are going to love. And we thought, wow, we're millionaires. Andy, what kind of car should we buy? And all this other stuff, and it was just too much."

"My mom thought, you're being really arrogant; you got to calm down. I had one friend who just sold his company for a lot of money, and he said, how much money are you making? And I said, well, making $80,000. $80,000 times 12. So you guys are making like a million dollars a year. That's not bad. I said, no, you got that wrong. It's not $80,000 a month; it's $80,000 a year. And after a few seconds of really awkward silence, he said, holy smokes, you guys are failing! You need to fix this! You need to fix this! You guys are like a scam; you're ripping off your investors, and this is just not good. Jessica, you got to fix this."

"And I knew that we had to look into our numbers and figure out why weren't we converting more of our users into paying us money. And it really came down to us forgetting what we were here for. We were so obsessed with fundraising and getting PR that we forgot to focus on making something that people really wanted. I mean, how many businesses actually need a Mint.com for businesses? They need their accounting done; they need their taxes done."

"And this is my one of my favorite mentors, Steve Blank. He's a retired serial entrepreneur, and he teaches at Berkeley and Stanford. I invited him over to my office to hang out, get some advice, and he saw the hot tub, and he shook his head a little bit. And he knew things weren't going well. And then at the end of the night, his final question for me was, or his final comment was, 'Jessica, don't be scared to pivot; it's not too late.' And in my head, I was thinking, why would I want to pivot? I love making accounting software. But we all knew that simply it was not working out."

"So I wrote a letter to my parents. Two months later, I want to read it to you because it's actually true."

"Dear Mom, Dear Dad, this is 6:00 in the morning. I couldn't sleep all night. I feel like I'm Bernie Madoff, rich on the outside but completely broken on the inside. There's just a lot of pressure right now because the company is running dry on money in the next nine months or so, and we really need to produce this summer, or else we're royally screwed. Anyway, I want to start seeing a therapist or something because this is just no way to live. I have no idea how you handle this entrepreneur job!"

"Jess, it was really bad. And my dad replied, I don't know if I was looking for sympathy or advice; thankfully, I got both. He said, I am sorry you are feeling kind of sad; it is normal to feel bad every now and then, but you need to get over it. Although you may not be able to change the situation or other people, you can change the way you perceive them. You can look at a glass half full or half empty, and a positive outlook can better help you achieve your goals. Take pleasure in many of your accomplishments and feel good that you have supportive friends and family."

"And I felt a little better after that, but really, he was just kicking me in the butt. And the point that really made a difference for me was, it is normal to feel bad every now and then, but you need to get over it because startups are really hard. All this was just self-imposed pain. If I was just failing all along, it wouldn't be so bad, but I made myself feel successful, and then I went down. So that's why it felt really bad."

"As I told another YC friend of mine everything that was going on, I was very honest. And he said, what's your worst case scenario? And I hadn't really thought about this before. And then just thinking out loud, I said, well, I could get rid of the office, get rid of that stupid hot tub office. I could tell all the employees to find a new job, and then I could ask for a loan from my parents. And wait a sec, that's actually a really good idea! Why don't we do that?"

"And he's like, no, I didn't mean that far. But I slept on that for a few nights, and I decided that this is actually what we need to do. This is the only way for us to survive. So I emailed my office broker. I told him, let's pack up the office. Here are our Aeron chairs being packed up, and I told all the employees one by one, this isn't going anywhere. I want you to have a job, start looking, and I'll give you like 60 days to find something new."

"And the biggest surprise for me was that I actually felt a sense of relief from all of this. I no longer felt like I was scamming anyone. I was coming to terms with reality. It's like when you're an alcoholic. The first thing to do is to admit that you're an alcoholic. Well, here I'm admitting that I'm failing, and I'm coming to terms with that truth. And that's why I actually felt a lot better and a lot more relieved after we made that decision."

"And here's us playing StarCraft. We decided to take a break from all of this. We took a lot of time off to go to Monterey, Santa Cruz, spent a week in New York, a week in Orlando for Disney World, went to Lake Tahoe. We really goofed around. And the reason why I say that is because I feel like a lot of founders, when things aren't going well, they try to work themselves out of their paper box. They think if I work harder, I'm going to figure out a way to get around this."

"As CEO of my company, I knew that wasn't right for us. We had to do something completely different. We had to take a break and then hope that we'd come up with some aha moment."

"Here's us in Disney World."

"Another big thing that surprised me was that my co-founder Andy and I, we never talked about failure. We never talked about what-if scenarios, like what if this doesn't work out? What if we have to return our money to the investors? And what if we have to just get real jobs? None of that ever came up, not once. I think we just kind of understood that somehow we would get through all of this."

"So it's back to the drawing board. After we got back from our trips, we wanted to figure out how to get ourselves out of this rut. And the question was, what will businesses pay real money for? Because businesses were only paying us like $20, $30 a month. If you do the math on that, in order to be the next Intuit, in order to have a billion-dollar business, you would need 4 million businesses paying us $20 a month. And that was unreasonable because only 10% of our users were converting, which means that you need something like 40 million free users on the platform."

"The problem is, there aren't even 40 million businesses in America! So we were screwed from day one anyway. And no wonder why Ron Conway never invested in us; this was just a terrible idea to begin with. And we said, let's take a step back. How about we charge a few hundred a month, and then we'll find the solution from there? So work backwards from the solution."

"Uber was taking off at the time, and our idea was, let's be Uber but for accountants. Let's take a 20% cut out of all referrals we send to accountants, and then that way we'll actually make some real money. And then that idea led to us deciding let's just do the accounting ourselves. Let's just do the taxes ourselves. And that's the idea today in indinero. We do accounting, we do taxes, we do payroll, and we're a one-stop shop. Pay us a few hundred dollars a month, and we'll just take care of all this for you."

"And that felt like a much better idea, a much crisper idea. I scrambled to put together a sales deck. I thought this would be a hit. I called up all of my friends and I said, we've got to meet up for lunch. I've got this great accounting solution for you. And I found one friend who would meet up with me the next day. I took her out to pizza, and she said, this is perfect! This is exactly what I need! Sign me up!"

"And I came prepared. I knew she'd say that, so I printed out a credit card payment authorization form, and I had a fancy pen. I pushed it over the table. I paid for the pizza; I said, pizza's on me, don't worry. And she filled this out, and I ran back home and I said, Andy, guess what? We got our first customer! You could stop playing StarCraft now and onto building the next piece of our business."

"And through all this, we realized we actually didn't know how to do accounting, and now we actually had to file tax returns for these customers who offered to pay us money even though we never figured out how to actually service them. And I decided if I'm going to hire people to do tax returns, then I need to learn how to do it myself. So we would code during the day, and then at night, like after 9:00 p.m., I would study, and eventually, I got my IRS enrolled agent license, so now I could actually prepare all of your tax returns."

"So after that, we decided to stay really frugal. This is our apartment office, and we hired a few employees again. I would take calls out of my bedroom, and then I would come out here and work on that sofa. The real reason why we had to work out of our living room wasn't because we were frugal; it's just because we didn't have any money this time, and we were still living off my mom's loan money and my co-founder's loan money from his parents too."

"And then we had to upgrade; we had to get an even bigger office. This was still a living room— I lived on the top floor, and we lived in another bedroom, and we bit about a dozen employees here. We stopped caring about billions of dollars under management and all those terrible metrics. Now it was just real revenue: how much money are we actually bringing in? And it felt a lot better."

"But the biggest development that I had was that after going through all of this, I just stopped caring about what other people thought about me. Because when you're failing, you don't want to go to conferences like this and all your friends say, hey, how’s indinero doing? And you're like, H, we're doing great, even though you know you're failing. And you just lead off all your employees; it feels really bad. So you don't show your face anywhere; you just stop showing up to places. And now I could actually finally like get out of my apartment again, so it felt great."

"And I had one prominent VC I met with for coffee, and you would all know her name. But she told me, 'Jessica, you have to be really careful because I spoke with some other guy VCs, and you have a really strong personality.' And no, I'm not saying it's a bad thing, but you have to be really careful because guys in our industry, they're just not used to women with really strong personalities like what you have. And I didn't know if I was supposed to feel insulted or what, but I was taken aback a little bit. But you don't want to shoot the messenger; she was just trying to be nice and give me some advice."

"And after a while thinking about that, I realized, you know, even they might call me someone with a really strong personality, but I'm going to say that I just have unapologetic confidence. And I'm happy to say that's who I am. And now we're really happy because this week now we have 50 employees full-time; we had our first profitable month in January."

[Applause]

"Thanks! And we're taking nothing for granted; I don't take my employees, my customers, my funding for granted, any of that. And in a way, I'm actually kind of thankful that the first version of indinero didn't work out because back then, I was just really cocky. I was just really arrogant, and I walked around with a lot of swagger, and it was just no good. I had a hot tub in my office, like you don't want that!"

"But now, I'm like really grounded. I'm really paranoid— maybe a little too much so— but I'm just not taking anything for granted anymore. I'm just happy that I'm still alive and I'm still in business. So to close, I want to just ask all of you: what kind of founder do you want to be? What kind of founder do you want to be when things aren't going well? What kind of founder are you going to be when you have lots of PR, when you're on the Forbes 30 Under 30 list, and you've closed all this funding at some mythical high valuation? And what kind of founder do you want to be when you have this VC telling you that you have a really strong personality? But whatever you decide, stick with that definition with absolute and unapologetic confidence."

"Thank you so much!"

[Applause]