Mariya Nurislamova, Founder of Scentbird at the Female Founders Conference

Really bright and sunny today. I can't unsee the slides, but I guess that's okay. Hi everyone, my name is Maria. For the past four and a half years, I've been building a company called Sunbird. Sunbird is a fragrance subscription service, and we help people date fragrances before marrying them. I'm really happy to be here today because Sunbird is, you know, it's probably one of the hardest things that I had to do in my life, but it's also one of the most rewarding, and the YC community has been instrumental in helping me get to this point. So it's really, I'm really happy to be here today.

Um now I would like to take you, I guess, behind the scenes of how we build the company and some of the early mistakes we've made, and God knows there were plenty. So, chapter one of our story, it's called the year of misery. I kid you not; that's how I refer to that time. It was the year where I think we read every book under the sun about building an MVP, yet we didn't talk to a single customer.

Um, I'm a huge fragrance junkie, so let me set the story straight: the company was built out of my passion for the category, right? I love fragrances; I hate shopping for them. You know when you walk into a store, like a thousand fragrances in the air, the lady is spritzing something in your face, the pushy sales assistant? I hated that. The coffee beans don't work. Long story short, I had a dream, and that dream was: what if I could discover my next fragrance from the comfort of my couch?

The one thing that was missing was a really good fragrance recommender, or scent recommendation system. So my co-founders and I set out to build one. I took us about… so the first landing page was very quick, and I was the original person who recommended fragrances. I doubt I was really good at that. Then we brought technology on board, and I think we built like six different ways for you to discover fragrances online. This one feature we call "Smart Search," but basically you can say, "Okay, like I want a fragrance for a workout that smells like oranges," and we basically got your back.

The problem was, we all decided as founders to quit our jobs, and this was the business model. Oh, wait a second, you cannot really monetize a recommender, can you? Because people are not gonna pay you. I think it took us about six months to realize again, it really monetizes a recommendation platform. Then we had to figure out what is it that we can build that can actually charge people money for.

So the first idea was, "Well, why don't we build a discovery kit?" Son discovery kit. So it was basically, it looked like this, if you can see: basically six small little samples. People would pay us nine dollars for that, and the idea was that if they liked a scent, they would purchase a full-size bottle from us. Long story short, they purchased the kit; they never really purchased the bottle, so all we made was nine dollars off of like a hundred people. Not really a billion-dollar business.

So we went back to the drawing board, and mind you, this is—we still haven't talked to one single customer about what is it that they really truly wanted, so we're all still living in our heads. Oh, and this was a fun time for me because we're operating on a shoestring budget. I basically don't have a job; my savings are dwindling down. So I found this really fun hack. You know when you go to support, they give you three samples for free? You know, when you go twice, that's six samples. You can sell them for nine dollars! It's an amazing business model—or not.

So I feel like I literally went to all 12 Safar's in Manhattan a few times a day. I asked my friends to do that. Not fun. They liked… I felt like sales clerks literally recognized my face: "What is she doing?" The fragrances? I don't know.

Next, long story short, we moved on to the new business model. We were like, "Okay, well maybe the problem with our first business model is that it takes an additional step for people to buy the full-size bottle, so why don't we shove them the full-size bottles right away?" So we came up with this try-before-you-buy model for fragrances: three full-size bottles of fragrances and little samples attached to them.

We would just ship to people for free—obviously, we would recommend them the scents based on all our algorithm and data—and they had five days to try the fragrances and ship the full bottles back if they didn't want any of them. So that was a really fun experience because we saw a 30 percent fraud rate on that business model. So we shipped a box, and more often than not, it would not come back, and we would then not be able to charge somebody's card.

So at the time, we were able to get into an accelerated program out here in New York called ERA, and they gave us $40,000. So basically, that's all the money that we had to play with, and I think we wasted about twenty thousand, which is half, trying to make this work, and God, very much in the red, got very upset.

Um, I think—I mean, saying that this was blood, sweat, and tears is really not saying much. So I think we came to a point where we really wanted to give up, and that's where we come to chapter 2: the glimmer of help. So, you know, when the going gets really hard, you call this one person who you hope is gonna support you. So for me, that person was Michael Seibel.

Michael is currently now the CEO of the accelerator program at YC; at the time, he was just a successful entrepreneur who sold his company to Autodesk. So I tried—I wanted to call Michael to cry on his shoulder. Basically, I was like, "Michael, you know, fragrances really suck. I don't think we can make them work. I think we're gonna build a makeup company." He goes, "Wait, what? Maria? You spent the last year failing at fragrances. You're telling me that you're gonna go and build a makeup startup and spend another year failing at makeup because that makes no sense. No, no, if I were to put my money into someone and a team that I think has the best potential to make fragrances work, it would be Sunbird."

Something shifted for me, and he thinks sometimes there's only that one mentor to kind of hold your hand for something when the going gets really tough. Michael also shifted my thinking a little bit because he said, "Maria, what if people are not looking for a signature fragrance? What if they would like to change fragrances like they change clothing?" I was like, "Huh, interesting idea."

I hung up the phone, and two hours later, we had the winning business model, and it was a fragrance rental, basically. So we said, "Okay, full bottles are not really working for us; we keep just losing money every time we try to sell full fragrance bottles of perfume." So we decided that we are gonna rent, quote unquote, or ship people a 30-day supply of a designer fragrance of their choice for under $15. So basically, instead of committing to one full bottle, you can kind of get it in increments and build your collection, and we decided to make it a subscription.

So we basically turned off all the fancy features on our site; it was a one-pager, really ugly-looking with this ugly picture—that's why I have it up on the slide—and they basically—it worked like magic! People paid us money first, you know, which of them product later. Amazing! We got—well, you can't really see the picture, but we got a hundred and five orders in a span of a week, and for us, that was like, I've never felt this successful in my life.

We were finally making it! Oh my god, now we had our nine-to-five as startup founders. Um, if you can tell from the picture, that's me on the left, with my co-founders. After hours, we would spritz perfumes, like literally trying to get them from a big bottle into a little guy until 2:00 a.m. every day. That's how we fulfilled our first orders.

These are the little guys, all packed up and ready to go—all 105 of them! I counted, I took them to the post office myself. And then we get to the real fun part: the darkest hour. And that's chapter three: the darkest hour is just before dawn.

As our business was scaling—well, scaling a hundred customers, not really scaling—it's really early on, and you know, I—we went through an experience of pitching a demo day at the first accelerator here in New York. Nobody really wanted to give us money, and I was looking in our bank account. I think out of the 40,000 that the first accelerator gave us, we had about 5,000, and e-commerce is a business that requires a lot of working capital. It requires a lot of cash.

So I realized that I would have to raise, and for the longest time, it was like the biggest disconnect because we were looking at this, and this is the rendition of like our first version of the assembler dashboard. You can hardly tell, but there're like literally three KPIs on here, and the most important one is how many orders a day we're getting. So we're getting ten orders a day. For me, it's huge; it's like I'm making it. But the rest of the world does not really catch up, you know, caught up to that. They're looking at my product; they're like, "It's kind of ugly. Wouldn't anybody want this?"

You know, and a lot of investors are like, "You know what? My wife doesn't use fragrance. I don't think you'll ever be successful." I'm like, "Okay." So I go ahead and I pitch people. I pitched—I didn't count, maybe 40 people; everybody told me no, but the noes are not the—like, noes never really upset me. What upset me were the crappy yeses, and I'll tell you what those are.

So I was pitching this one investor couple; they were angels. I told them, "Hey, I'm raising two hundred fifty thousand dollars to get this company off the ground; look, it's killing it—clearly 500 orders! Yeah!" And they basically took me for a spin. It was like eight meetings: "Send us this due diligence; send us that," like built a financial model for us. So I was legitimately thinking they were gonna give me $250,000 after all of this work.

Then we get to the close, quote unquote, to that last meeting when I asked them for the check, and they're like, "Okay, Maria, we're gonna give you $25,000," and they promised me a valuation that was three times lower than the lowest that I could accept at the time. They said that they would also want five percent advisory shares in my company because they didn't think I was qualified to run this business.

I walked out of that meeting and walked into another meeting, and it was probably even worse—although I don't know, it depends—but it was a real estate investor, and he said, "Maria, Sunbird is awesome! I love your idea. How about you give me 10% of your company for free office space for a year for you and your three co-founders?"

I walked out of that meeting; I told both of them no, obviously, although at the time, I was pretty close to actually saying yes to some of those deals. Then I went back to the only person who I thought would listen. His name is John; he's an angel investor. He doesn't invest in commerce, but for me he was a mentor, and I was always afraid to ask him for money. I would always ask him for advice. I'm like, "John, how do you do this? How did you do that?" I thought it was also the time when we applied for YC, by the way—it was the second time that we applied for YC; the first time we got rejected. It was fine; I was the wrong business model anyway. I would have rejected myself many times over.

Um, and basically, I came to John and I said, "John, Sunbird is raising a hundred K. I want you to put all of it, and I'm gonna give you a good deal. The reason you should do it is A: we're growing like crazy; B: I'm gonna get into Y Combinator in three weeks, and our valuation is gonna triple, so now is the perfect timing for you to invest."

So John wrote us a check for $100,000, and then that brings me to the next chapter: Y Combinator. Well, we applied to Y Combinator for the second time, and we didn't get in. So I had to call John back and say, "John, so no, the comp valuation is not 3x, but by the way, we have another 500 customers, so you should be really happy because we're basically a rocket ship."

Then I had to go back to the drawing board and keep raising money basically because we needed more working capital to build inventory. One thing, though, I think I discovered with that experience with John is the rule of scarcity, because all I said was, "Hey, I have a hundred K, and I want you to fill that whole hundred K. There is no room for anybody left in that round."

So what I ended up doing afterwards is every investor pitch that I had, I would come in and say, "Hey, so Sunbird's round is $150,000. I already have a hundred in my bank, so all I have left in the round is 50k. Do you want to be the last 50k in?" So I pitched six people and, like, funds, and I think I got five yeses out of that.

So that kind of really gets you over that like 150 real quick. And so I think that the big lesson learned there is, you know, if you're going for like a million, say you're really going for one quarter of that and then just keep oversubscribing; eventually, you'll get to that million. But, um, you know, I, again, a lot of my mentors, a lot of my friends are Y Combinator alumni, and although the business was growing, I still didn't feel like the DNA of the company was there and we truly had the product market fit on some level.

So a lot of my friends were like, "Maria, are you applying to YC?" And I'm like, "What? A third time to get rejected?" A third time! I did apply to YC, and long story short, we got in, hence they invited me to speak here because, you know, if I didn't get in for a third time, I probably wouldn't make it to this stage.

But basically, it was the best experience of our life. We moved out to California, and I really think it changed the DNA of our company to hyperfocus on growth—not like yearly growth and quarterly growth, but week over week over week over week. When you go through that experience, you always feel like in your batch every company is growing faster than you and everybody is smarter than you. But, by the way, you walk out, and you’re like, the best peers and the best friends out of this.

The one thing that YC also taught us is to have true user interviews to really try to understand what people think. And then this one funny one that's stuck with me, it was probably one of the first ones somewhere in the Palo Alto area. We met with this lady in a coffee shop; she wasn't a user of the product, and like, "Hey, we wanted to meet with you to see what you think about our product." She goes like, "Are you dying? Is Sunbird going out of business? Is that why you're talking to me? I bet you don't die! Please don't die! I'm gonna buy 10 subscriptions!" I'm like, "What?"

She clearly cared, and that was like probably the most—that was probably the first time when I truly realized we might just make it. Because when people are willing to, like, just pay you 10x just like, "Don't die, please," it's, you know, you kind of know that you're building something that people want.

And now chapter 5: life after YC. You know, for most companies, they kind of like end up making it; the bigger chunk of their life would be post-YC, not prior. Um, I kind of wanted to leave you with a couple of last thoughts, some of the things that you know I wish I knew, or I just need to remind myself.

So the first one is surround yourself with 10x people. And what I mean by 10x is not like 10 times more people; there's this basically, you know, concept—like in more traditional industries, somebody who's really top of their game is just about maybe 2 times better than your average person. In startups, because it's like really out-of-the-box thinking, really creative top people, the crème de la crème—like if the smartest people are 10 times better than your average person. And I wish I knew that when I started hiring my team because I would always go for the cheapest person. Like, "You know, oh, you're cheap and you're kind of hard-working, welcome to Sunbird."

You know, and I was like, "Well, I could have hired probably three times fewer people—just hire the 10x people—and we would've probably gone that ahead." So that's the one.

• It actually has been said before here today: have an audacious dream and not just having an audacious dream communicated; kind of like come out, tell the world what your dream is. Because when you do, you help—about right. So, and you know, the world actually can get on board with you.

I think as women we do tend to be very shy, and that sentiment has been shared here today. You know, pronouncing the billion billion word is really hard, but I think we have to—I mean I've heard pitches from women like, "We're gonna be 50% of this industry in three years," and I'm like, "Yeah, you're really bummed." But, you know as women, we kind of prefer together first and then say that we really wanted to hit that target. I think we have to start reversing our thinking and first kind of like setting that audacious goal, communicating it to the team, to the partners, to everyone, and then hitting it.

Then last but not least, which is also a big lesson learned for me: don't take advice from people that don't have what you want. I don't know how many of you are building your companies. I certainly, when I got started, I felt everybody wanted to give me advice—from, you know, my mom and I do welcome her advice—to everybody else, you know, friends and family and everybody.

And one of the conversations really stuck with me, so it was my successful friend; she has built a business like a hedge fund—very rich—and so I told her, "Hey, you know, I kind of want to build this tech startup in a fragrance world." And she goes like, "Have you ever worked for a fragrance company? Do you even know what...?" Like, you know, I'm like, "No, I have not worked for a fragrance company, but I think I might just make it." And basically, she was very discouraging, and I'm really happy I didn't listen because in that moment, I was this close to going like, "You know, maybe I should apply to L'Oreal and spend my next 10 years working for like $60,000 a year or something and being really miserable at my desk."

I'm really happy I didn't. So in other words, only take advice from people who have what you want in life. Just, you know, to like wrap this up, um, Sunbird has come a really long way. We're now a team of about a hundred people; we're shipping fragrances to about 250,000 people in the United States. We are eventually going to expand internationally. We've raised about 25 million dollars—not people, luckily!

Yeah, and I think that a lot of what we accomplished is definitely thanks to YC. So if you guys are running companies and you haven't applied, I strongly encourage you to do so. It'll change your life. Thank you so much for your attention!