Essential Startup Advice with Adora Chung, Reham Fagiri, Tiffani Ashley Bell, and Alana Branston

All right, hello everyone! My name is Oh Dora. I'm one of the partners at Y Combinator. I have Rehan from App Deco, Alana from Bulletin, and Tiffany from The Human Utility. Today, our discussion will be around essential startup advice.

I think there's a lot of actually good advice in books, articles, and even on Twitter sometimes, but they tend to be very generic and abstract. It's not about trying to make it apply to everybody as much as possible. So today, I want to go over some of that common advice you probably see and dive one level deeper into how it applies to these three folks and their startups, and go from there.

The most common advice I hear all the time, and I give all the time, is to make something people want. It's so common that it's almost the motto of Y Combinator. So maybe you guys can start off with introducing yourselves and what's the one-liner for what you're building, and how did you know why you thought it was something people wanted?

Hi everyone! I'm Rehan Figuri, co-founder and CEO of App Deco. We are a marketplace for buying and selling furniture based here in New York City. So if you're selling furniture, definitely check out App Deco—I have to plug all the time! The reason why I started App Deco was actually out of my own frustration trying to sell furniture on Craigslist. I had a really bad experience and realized that something had to be done to make it better and more efficient. So we are a one-stop solution; we take care of the pickup and delivery, we handle payments online, we verify everything before pickup. That was the reason why we started; it was because of my own frustration.

Hi guys! I'm Alana Branston, co-founder and CEO of Bulletin. Bulletin is a WeWork for retail space. We build physical retail stores where direct-to-consumer brands can sell their products for a monthly membership fee. We have two stores here in New York. The stores are actually filled with all female-led brands, so yeah, it's completely for women by women.

When we started the business, we actually did not build something that people wanted at all—it was a disaster. We started off with what was basically an Etsy competitor; it was like a cool curated Etsy. That was the idea, and we literally didn't sell anything. It didn't work. Then we started talking to those users and basically asked them, "Okay, like what can we do that is helpful because this clearly is not?" We figured out that they wanted access to retail space and how hard it was for them to get into stores. So yeah, we eventually built something people wanted; it just took a while.

Hey everybody! I'm Tiffany Ashley Bell. I am the founder and executive director of a not-for-profit organization called The Human Utility, where we essentially pay water bills for people that can't afford their own. We've done that for like a thousand families in Detroit, Baltimore, and a bunch of surrounding cities since... thank you! It's not really us; it's all you guys who have donated. But you know, we've done that for a thousand families since we started in July 2014. It was more of making something people need. We essentially crowd-fund the money to help people.

I just read one day—I’m not from Detroit or anything like that—I just read about what was happening in Detroit because I was actually working in City Hall Atlanta. I was just thinking to myself, like what kinds of failures had to happen in City Hall where somebody just decided that if you're poor, we'll turn your water off? I thought that was pretty crappy. So friends and I got together and just decided to, like, you know, throw away a hundred bucks and then one weekend on some shirts we don't need in a bad restaurant. So why not give that to, you know, people to help with their water bills? But it turned to like the whole internet wanting to do that, so I've been doing that ever since.

Awesome! Okay, so another piece of advice is to do things that don't scale. So give us one example of something that you did that wasn't really scalable but you had to do it anyway, and maybe it's related to how you got your first user.

I have a lot, but so when we first started, I don't know how many people are doing marketplaces, but the big problem with marketplaces is this—they call it the chicken and egg problem. You need to get, you know, content and also buyers. So how do we convince people to actually transact on our platform? How do I get a furniture platform where nobody will trust that I actually am a real legitimate business? That was the question that we were trying to tackle.

So we went on Craigslist. The reason why I actually built the platform is because of Craigslist. We were going on Craigslist just telling people, "Hey, you should try App Deco—we are going to take care of delivery," except direct sector because after some people, you know, were convinced enough to list. But the part that actually came out of one of my partner meetings at YC was instead of having people email them and have them go list on your website, why don't you just list it for them? And so that was like, "Oh wow, is that even kosher?" I mean, I don't think it is, but we just started going on Craigslist and just copying content from Craigslist to our site.

There's a whole other story of like once something's sold, how did we get it to the customer? That's a whole different story.

Yeah, for us, when we were pivoting from this like Etsy competitor idea to the retail space idea, we really didn't have any money. I think we had 20k that we had gotten from YC Fellowship, and we were like, "Okay, how are we gonna test like a retail space concept?" So my co-founder and I—it was just the two of us at the time—started doing these like outdoor weekend flea markets as a way to test the concept.

We literally rented out this like overgrown vacant parking lot in Williamsburg. It was like a toxic wasteland, and we had all these brands come. We had like 40 brands come every weekend, and they would come and like set up their product and sell, and like it actually went really well. They were making a lot of money, we were making money finally, and we used that to basically prove that like, okay, brands will show up and pay for space. There are definitely better ways to do this, and yeah, it was completely unscalable, but it proved our point, which is good.

So, we have kind of a two-sided thing where we have donors and the people that actually need the help. If you follow me on Twitter, I'm sorry, but that's like the way that we got the initial donors. We had all this money that kind of piled up as far as pledges go, and since we've done everything on social media, we didn't know how to access or like get to the people that needed the actual money.

What ended up happening is just like we got really low-tech. We just designed some postcards and sent them to people. The USPS has a way where you can just like target certain blocks and just kind of say you want to send, you know, 500 postcards to this street. It's like kind of gerrymandering the way it looks like, but like we ended up just doing that—just going from our database and just saying we have a lot of people from Detroit in this zip code that are applying. So why not just target that entire zip code? We just started doing that kind of thing. These people were not on social media, so we couldn't just keep tweeting for them. And actually, maybe I'll talk about it later, but the city wasn't helping us either because they were kind of like, "Who the hell are you?" So they were just, you know, we didn't get help in that way. We kind of had to just hack it in that way, and it turned out to be a really interesting sort of thing to send out postcards.

So the next one is find 10 to 100 customers that really love your product. How did you determine that people were loving your product? How did you define that either qualitatively or quantitatively?

So I’ll continue along the same story. So for us, once we started, you know, listing these products from Craigslist and trying to—we got our first sale and we were like, "Wow, okay, what are we going to do to actually fulfill this sale?" Because these sellers don't even know that we've listed their product on our platform. We were trying to figure out how to fulfill that order.

The first time I tried, I emailed them, "Hi, I am the co-founder of App Deco. We sold your product on App Deco, and you know, we’re going to pay you," and it just didn't work—nobody responded. So then we just realized, "Hey, why don't we just actually pretend like we're Craigslist shoppers?" We went on their path. I go and just email them like, "Hey, I’m gonna buy," and we just paid them in cash. That’s what we did!

The most amazing thing that happened out of that is because we were actually visiting every person's home, we were talking to our customers. We realized once we told them why we started this, because once we got to their home, we would tell them, "Hey, by the way, this is App Deco, this is what we do," etc. They were like, "Wow, this is amazing!" They actually started telling all their friends. So every time we went, and we were doing something very unscalable, 5-10 people signed up as a result of it. So that was the genesis of sort of getting from, you know, 10 to 100 customers—referrals, basically.

Yeah, I feel like we had like a pretty similar experience. Once we started getting referrals from brands, we felt like, "Okay, like we’re doing something good enough that people are recommending their friends." I think we got lucky because our users were in this tight-knit community of brands, and so they all would talk to each other. If someone sold in our store for a few months and they were making good money, like they're gonna tell someone else in their community.

Yeah, I think it was like when we opened the third store and we just were able to like book it out immediately. We like couldn't believe that people were paying like pretty healthy rates to sell in the store, and yeah, it was just like finally getting to a point where we were doing something right for the users.

Yeah, I mean, so the first—but again, from donors versus the people that we were helping. So the donor side was again just social media, and it turned into like the news finding out about us and then people signing up from there. That became like me getting stuck in my apartment for like two weeks, talking to press over and over again about what we were doing because it was kind of weird, if you think about it, to pay somebody else's water bill. So people were kind of fascinated with that aspect.

But then as far as the people we helped, again, it’s the postcards, but then Facebook groups and stuff like that.

So let's talk a little bit about competitors. The common advice is just to ignore it. Your growing startup—it’s not going to die because of suicide, not murder. So how do you guys think about competitors?

It's definitely—it’s easier said than done to ignore them for sure. But you know, I've learned through time now, over our fifth year in business, that is really the best advice: to try to ignore them. What I've learned over time is to just focus on the things you can control. You can control delighting your customers; you can control making, you know, a product that people want and things like that.

We’ve had competitors that have raised, you know, tons more money than we have to date even, and they've shut down. So it doesn't really matter in the end; it’s all about the execution. Just focus on the things that will make you, you know, compete in the market.

Yeah, I think we try to ignore them as much as possible also. I definitely have like my Google Alert set to say like if they announce certain things. I think, you know, we’ll look to see how they're positioning their product in the market or when they’re raising money, but yeah, I think the more you can just keep your blinders on and look at your metrics and look at your milestones, keep your team looking at that and not be like, "Oh my god! They just raised twenty-three million dollars! What are we gonna do?" It’s just—it’s distracting and it doesn’t really help you in any way.

Yes, sir! The not-for-profit sector is a little different because there's still totally competition. It’s not just this, like, "Oh, everybody's trying to help the world" or whatever because it’s actually surprisingly cutthroat, which I learned kind of on-the-job. Maybe if you pull me afterwards, I’ll tell you about certain mafia-esque phone calls I got from other organizations. I’m not even kidding.

But like just for us, it’s been like learning how to like communicate the work that we're doing really well and also just pulling in people's heartstrings and like learning how to do the storytelling. Then also eventually, we butted heads with the cities a little bit.

So what’s that? We butted heads with the cities a little bit or they weren't a couple at all?

No, so I think when we launched, we embarrassed Detroit, which wasn’t the goal. We just helped people when they didn’t, and so they told people not to come to us for help because they’re like, "You know, if you need help, come to us," but they weren’t helping people—they were turning off cancer patients for crying out loud! This is the kind of stuff that was going on.

But we got a call from a certain very big nonprofit—so national organization—and they saw us as competition, which was funny because I was still like operating this out of my bedroom basically as a fundraising thing. But it’s just a principle that, you know, we got more press. What we were doing was resonating with people more and we could show actual like success stories, and we weren't like building six houses with hundreds of millions of dollars and that kind of thing.

So I think the nonprofit sector has competition still, but I think if you show that you operate better, you’re actually using the money for what you say you are and you’re putting those success stories out, and then you’re talking about like the systemic change that you’re trying to actually kick off, that actually resonates with people. That’s the question I get all the time too: like how are you gonna do this? What’s the long-term sort of plan? And for us, it’s actually not to keep raising money—but it’s actually to have laws passed around water affordability and just kind of use a lot of startup principles to do that.

So cool! It’s often said that you shouldn’t start scaling, as in hiring lots of people, until you find product-market fit. So maybe, Keith, we kind of went over and we talked about referrals and stuff like that, but maybe you can go over when did you know you should hire your first person? Who was your first important hire and why did you hire that person?

Product-market fit for us was when we decided to take on delivery and make it in-house. When we started the business, we did not want to touch the furniture; we just wanted to provide the platform. A year or so into it, we were working with third-party moving companies. We realized that the quality of service was not up to par and they were just canceling jobs on us last minute. So we hired some guys off of Craigslist again and rented a van. That day, you know, we had incredible feedback from customers.

Fast forward, you know, now we have over ten trucks in the city. What we saw was as soon as we brought delivery in-house, you know, we talked about referrals, but really it skyrocketed. The type of referrals, the quality of services as well, and the branding. Also, our metrics—we now understand our metrics very well, and that was really the basis for it.

I mean, our first hire was customer service because it was all about delighting customers. What I learned over time is, you know, your needs as a business change over time. So our first hire was customer service, and that was at the time the most important hire. Fast forward a couple of years later, our head of operations and obviously our engineers, etc.

Yeah, for us, it took us about a year and a half before we got to product-market fit. We pivoted so many times and just kept taking like the little things we learned and used it for like the next version of the company we’d run. But yeah, it literally wasn't a year and a half until we got to a point where we were opening retail stores, they were working, and the brands were happy.

To answer your question about the hiring, I think our first important hire is really what got us to like full product-market fit in my mind. There was basically a point where we were treating the stores as like the store as a service—like any brand can come and sell their product. We ended up with this like crazy store where there are like Fitbit competitors next to blankets, and it just didn’t make sense, obviously.

So we hired our Director of Product, Maggie Brain. She came from J. Crew, who just totally transformed the business. She’s a merchandiser, and she was able to really pick the right brands, pick the right products and price point. I mean, the stores just took off after that, but it was like that final key hire before we were like, "Okay, like we can scale this; we're good!"

Yeah, for us, product-market fit is just like having people continue to support us basically. So we've been trying to build a stronger recurring Giving Program, so that's still kind of in the works actually, because like I had never run a nonprofit before, so I didn't know like what we should actually be doing and like what that looks like as far as success—besides like changing laws. So we're still doing that, but as far as like our first hire—we had it—it was also in customer service because like, you know, we had all these people that were applying for help that like I couldn't talk to them all on my own.

We talked about stuff that didn't scale. I was turning into kind of like a social worker slash therapist, but I like talking to everybody who applied; I talked to them on the phone for at least 30 minutes. Which was good in the beginning because like people were feeling heard for once, because then you deal with a lot of people that are in poverty. The thing that's common among such is they could be overlooked and ignored, and so we just kind of—I just listened to people more.

But Kate, who used to direct nonprofits at YC, kept telling me, "You need to hire somebody because you're looking worse and worse every time I see you, and you can't, you know, you can't do this on your own." So I actually—the spring of 2016—I’m an engineer by the way too, so like I took a month off from everything else and just built out what became our case management system, and then that allowed me to actually hire the customer service person because they would have had the no rails otherwise because all we had was the Rails console.

But that was our first customer—I mean, I'm sorry, first hire.

So, am I related to that? When founders come into YC, we say please, please remember to get some sleep and some exercise. So how do you guys stay sane while running a startup, or do you still—still trying to figure that one out?

Yeah, so this year at least, I'm trying to make it to the gym more and travel. It's still a work-in-progress, but definitely it's very, very important. What I learned over time is it's not about the number of hours, or about how productive you are. You can work six hours and be more productive than working 15 hours in a day. So I'm trying to still implement that, but yeah, it's very, very important.

Yeah, I think for us—I mean, it's something where it ebbs and flows. Like there are weeks where things are just completely insane and we're opening a new store and I just feel like very unhealthy, not okay. I think the whole team gets that way sometimes.

But yeah, I mean, I think when we do have kind of a Down moment, like trying just to really take advantage of it and just, you know, not go into the office on the weekend. Running has really helped me. I know like a lot of people hate running—I used to—but for just my mental state, like running has done wonders for me. So yeah, I know people hate it, but maybe try it!

I mean, so this is actually the end of my vacation this week. I was like literally—I was on vacation this entire week, which never happens. But the three things that I've been doing more is going to therapy, I work with an executive coach that helps me like stay organized and prioritize and things like that. Then like something I started in the last couple of months is acupuncture because it's helped with like energy issues and like actually getting me to sit down somewhere during the business day. So those are really good things.

I know we're over time, but I apologize. But I want to add in one more question because I think it's so important, and that is advice: founder relationships matter more than you think. So can you talk about your relationship with your co-founder and how do you guys stay sane with each other and balance things?

So for us, I have a co-founder, and so my background is in engineering and he came from marketing and sales. Early on, we tried to create delineation of roles, and you know, we butt heads still all the time. But at the end of the day, someone has to make the final decision because if it was always a democracy and we both have to come to a consensus, we’re just never going to move forward and move quickly.

So what we do is, you know, any product-related thing, I essentially have the final say. Any marketing-related thing, he has the final say. For example, we run subway campaigns—I really did not want to spend the money, and he was like, "Well, we're gonna do it," and we did. It actually worked out to be very well!

But you know, I think this is the important thing: creating that sort of—making sure that you have a structure where you're able to make decisions fast and quickly. Conflicts are okay, but you have to figure out a healthy way to manage them as well.

Yeah, I feel like I just got so lucky with my co-founder, Ally. We have very complementary and different skill sets and personalities. Like I’m more introverted, I like to kind of manage things from behind the scenes. She is like the total opposite—she's highly extroverted, amazing salesperson, amazing press person. So we work really well together.

I think even from the very beginning, when it was just the two of us working in my apartment, we just could kind of like stay in our own lanes. I just knew what I was good at, what she was good at, and yeah, we just worked really well together.

So yeah, I think when you're looking for your co-founder, even if it's not like she's the technical one and I'm the non-technical one, I don't think it needs to be like that. But looking at different personality types and even soft skill sets, it really helps to have a little bit of a mix there, I think.

So my original co-founder couldn't go through YC with me, but she's like a very dedicated donor advisor at the organization. But the next person that I think of that’s been around just as long technically is my—the customer service person I hired, Marie.

I’m the fundraiser and the person that like does all the technical stuff, but she does the customer service, which again, I burnt out on. But the other thing is she’s really good with people. I still labor under the belief that this is ridiculous; I have to do this as an organization. But she is just kind of like, you know, okay, I'll call the city people and talk to them for you because I'm on the phone like, why the hell can't you do this or whatever.

She’s patient enough to be like, you know, I will talk to them, I will make this work for us or whatnot, and she's way better at that stuff than I am because I'm just like, to me common sense—this shouldn't have to be a thing. But she's able to talk to people and kind of finesse them and whatnot, so I really like appreciate that aspect of the work she does.

Cool! Awesome! Well, that's it. If you can give these three a round of applause. Thank you so much! [Applause]